What is Repo Rate?

9. What is Repo Rate?

  1. When a bank has excess cash, they buy securities from RBI against cash on the condition that they resell the securities to RBI on a prefixed day and price
  2. It is the rate at which RBI allows temporary loan facilities to commercial banks against government securities on the condition that the bank will repurchase the securities within a short period
  3. Rate offered by banks to their premium customers
  4. When a bank needs cash it can it can discount bills of exchange and avail loan facilities from the Reserve Bank of India
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Answer: B) It is the rate at which RBI allows temporary loan facilities to commercial banks against government securities on the condition that the bank will repurchase the securities within a short period

Explanation:

Repo rate is the rate at which the national bank of a nation (Reserve Bank of India if there should arise an occurrence of India) loans cash to business banks in case of any deficit of assets. Repo rate is utilized by money related specialists to control expansion.

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