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.