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Q.

What is the meaning of repo rate and reverse repo rate?

Tags: reverse repo rate, meaning of repo rate
Asked by pappu agrawal, 27 Feb '08 05:09 pm
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Answers (6)

1.

Repo rate is the rate at which RBI lends money to Scheduled banks. Reverse repo rate is the rate at which RBI borrows money from Banks. Usually the rates are applied when auctioning the Govt Securities.
Answered by Satyanarayana Tumuluri, 27 Feb '08 05:13 pm

 
  
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2.

Repo (Repurchase) Rate
Repo rate is the rate at which banks borrow funds from the RBI to meet the gap between the demand they are facing for money (loans) and how much they have on hand to lend.
If the RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.
Reverse Repo Rate
This is the exact opposite of repo rate.
The rate at which RBI borrows money from the banks (or banks lend money to the RBI) is termed the reverse repo rate. The RBI uses this tool when it feels there is too much money floating in the banking system
If the reverse repo rate is increased, it means the RBI will borrow money from the bank and offer them a lucrative rate of interest. As a result, banks would prefer to keep their money with the RBI (which is absolutely risk free) instead of lending it out (this option comes with a certain amount of risk)
Consequently, banks woul ...more
Source: Ashish Koshta, 09329385750
Answered by Ashish Koshta, 08 Aug '11 11:27 pm

 
  
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3.

Repo and Reverse Repo are tools available in the hands of
RBI to manage the liquidity in the system. It either
injects liquidity into the market if the conditions are
tight or sucks out liquidity if the liquidity is excess in
the system through the Repo and Reverse Repo mechanism,
besides a host of other measures.

Now in REPO RBI injects liquidity into the system i.e. it
purchases the securities from the banks and lends money to
them to ease their liquidity crunch. The rate charged by it ...more
Answered by abhishek dixit, 28 Sep '08 11:44 pm

 
  
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4.

What is the meaning of repo rate and reveres repo rate?
Answered by Nilesh Majithia, 02 Aug '11 11:19 am

 
  
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5.

In simple language
repo rate is when RBI gives the money to banks and charge a rate of interest and that rate of interest is called REPO RATE.
reverse repo rate is when RBI keeps the money of banks and gives the rate of interest that is called REVERSE REPO RATE.

* please check once again coz i'm getting a lil confuse it can be vise-versa too.
Answered by Manish Luthra, 27 Feb '08 05:15 pm

 
  
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6.

Repo rate is that on which Reserve Bank Of india gives loan to other Banks.Reverse repo rate is that interest rate on which Reserve Bank Of India takes loans from other Banks
Answered by vivek singh, 27 Feb '08 05:15 pm

 
  
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