BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

At which of the following rates does the Central Bank lend to banks against government securities?

A	Repo Rate
B	Reverse Repo Rate
C	Bank Rate
D	CRR

Explanation:

Detailed explanation-1: -Repo Rate: It is the interest rate at which the central bank of a country lends money to commercial banks.

Detailed explanation-2: -Repo Rate (RR) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities. The current Repo Rate 2022 is at 4.40%. Changes in Repo Rate affect the flow of money in the market.

Detailed explanation-3: -The rate at which the RBI lends money to commercial banks is called Repo rate.

Detailed explanation-4: -The current/ latest rates as per RBI Monetary Policy are: SLR 18.00%, CRR is 4.50%, MSF is 6.75%, Repo Rate is: 6.50%, Reverse Repo Rate is 3.35%, and Bank Rate 6.75%.

Detailed explanation-5: -The key distinction between the repo and reverse repo rates is that the repo rate earns income through lending to commercial banks, whereas the reverse repo rate earns interest on funds deposited with the Reserve Bank of India.

There is 1 question to complete.