Repo & Reverse Repo Rate

Repo Rate- The rate at which RBI(The Central Bank of a country) lends money to banks is called repo rate in India.

Reverse Repo Rate- The rate at which borrows money from banks is called reverse repo rate.

The central bank makes changes in repo or reverse repo rates whenever it is required. By doing this the central bank maintains the cash flow in the economy.

Change in the repo rate:

I. To control the inflation rate: To control the inflation rate is one of the main objective of any government. If the inflation rate is very high, the purchasing power of people decreases. Sometimes it become

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: