ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The rate at which banks place their surplus funds with the RBI
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The rate at which banks can borrow against their excess SLR securities to meet additional liquidity requirements
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The rate at which the Reserve Bank is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase
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The rate at which banks borrow funds from the Reserve Bank against eligible collaterals
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Detailed explanation-1: -On the other hand, reverse repo rate is the interest rate paid to commercial banks when they deposit their excess funds in the central bank or when the central bank borrows money from them. As of April 2021, RBI’s repo rate stands at 4% and reverse repo rate at 3.35%.
Detailed explanation-2: -Definition: Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country.
Detailed explanation-3: -The current repo rate is 6.25% as of 7th December 2022, while the reverse repo rate remains unchanged is 3.35%.
Detailed explanation-4: -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%.
Detailed explanation-5: -Repo and Reverse repo rates are decided by the Monitory policy committee (MPC) of RBI. SEBI is the Securities and Exchange Board of India. It is the regulator of the Indian securities market and was established in the year 1988.