2016
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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15
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20
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25
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30
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Detailed explanation-1: -Suppose the country is going through a cash crunch. In this case, RBI will reduce the repo rate to help banks borrow more and make loans available to the public at reduced rates. Now, if the country’s economy is experiencing inflation, RBI will increase the reverse repo rate to limit borrowings by commercial banks.
Detailed explanation-2: -Generally, when the repo rate is reduced, the interest rate charged on home loans, EMIs etc. also reduces, making it easier for customers to avail loans or borrow from banks.
Detailed explanation-3: -Statement: In its first bi-monthly policy review, RBI has decided to cut the repo rate by 25 basis points and take measures to ease the liquidity constraints in the banking system.
Detailed explanation-4: -In view of persistent excess liquidity, it has been decided to widen the existing policy rate corridor from 50 bps to 65 bps.