Repo Rate and Reverse Repo Rate

  • Repo rate is the interest rate charged by the Reserve Bank of India when lending money to commercial banks.
  • Any alterations in repo rates can influence the economy directly.

Reverse Repo Rate in India

  • Provides interest rate by RBI for borrowing from commercial banks.
  • Charged by banks to park excess money with RBI for short-term.
  • Crucial monetary policy instrument controlling money supply.

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