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Examine the following statements: A. Repo rate is the rate at which the Reserve Bank of India borrows money from commercial banks within India. B. Reverse repo rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds. C. The RBI increased the repo-rate and reverse repo rate by 25 basis points to 6.5% and 6.25%, respectively on August 1, 2018 Choose the correct answer:

Examine the following statements: A. Repo rate is the rate at which the Reserve Bank of India borrows money from commercial banks within India. B. Reverse repo rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds. C. The RBI increased the repo-rate and reverse repo rate by 25 basis points to 6.5% and 6.25%, respectively on August 1, 2018 Choose the correct answer: Correct Answer C only

The correct answer is C only.

  • Repo Rate:
    • Repo stands for Repurchase Rate.
    • Repo rate is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds.
    • In the event of inflation, central banks increase the repo rate as this acts as a disincentive for banks to borrow from it. This ultimately reduces the money supply within the economy and thus helps in arresting inflation.
    • Repo Rate is the most vital rate for the common man. Everything from interest rates on loans to returns on deposits is influenced by this important rate set by the RBI, which is why interest rates on home loans, car loans and other forms of borrowings go up and down supported the direction of Repo Rate change.
    • Similarly, banks adjust bank account, fixed deposit returns supported this benchmark.
  • Reverse Repo Rate:
    • It is the rate of interest that is provided by the Reserve bank of India while borrowing money from commercial banks.
    • In other words, we can say that the reverse repo is the rate charged by the commercial banks in India to park their excess money with RBI for a short-term period.
  • On August 1, 2018, the repo rate and reverse repo rate were 6.50% and 6.25% respectively.

Related Questions

Consider the following statements regarding Repo rate : 1. It is the rate at which RBI lends money to Commercial Banks generally against Government Securities 2. It is the rate at which RBI borrows money from Commercial Banks generally against Government Securities  3. It is the rate at which Commercial Banks keep Deposits with RBI  Which of the above statements is/are correct? 
Which of the following statements are true in context of scheduled banks?
1. All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks.
2. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative Banks.
3. Scheduled Commercial Banks in India are categorized into five different groups - SBI, Nationalised Banks, Regional Rural Banks, Foreign Banks and Other Indian Scheduled Commercial Banks in the private sector.
4. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban Co-operative Banks.
The Reserve Bank of India (RBI) acts as a banker’s bank. This would imply which of the following ? 1. Other banks retain their deposits with RBI 2. The RBI lends funds to the commercial banks in times of need 3. The RBI advises commercial banks on monetary matters Select the correct answer using the code given below : 
The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following? 1. Other banks retain their deposits with the RBI. 2. The RBI lends funds to commercial banks in times of need. 3. The RBI advises commercial banks on monetary matters. Select the correct answer using the codes given below:
In the question below, are given a statement followed by three courses of actions numbered I, II and III. On the basis of the information given, you have to assume everything in the statement to be true, and then decide which of the following suggested courses of actions logically follow(s) for pursuing. Statement: In a bid to find a successor to founder CEO Rana Kapoor, The Yes Bank has formed a five member panel including two members from outside the bank, less than a week after Reserve Bank of India (RBI) cut short his tenure until January 31 2019. In a press release sent to the exchanges late on Tuesday evening, Yes Bank said that the “search and selection committee” would comprise of three members of the bank’s nomination and remuneration committee and also two external members, which the bank did not specify.  Courses of action: I. However, the board has requested the Reserve Bank of India (RBI) to grant an extension to Kapoor up to September 2019 ‘for finalization of audited financial statements for fiscal year ending March 2019 and in order for the statutory AGM process to be completed’. II. The board has also recommended the elevation of senior group presidents Rajat Monga and Pralay Mondal as executive directors ‘to ensure a long term succession plan within Yes Bank, and given the demonstrated track record of these two senior leaders’. All this will be subject to RBI approval.  III. The panel will comprise of five members and will focus on find a successor to Rana Kapoor.
The rate at which Reserve Bank of India lends short term money to commercial banks in the event of any shortfall of funds is called:  
Which among the following is NOT a correct statement?  1. The Reserve Bank of India worked as Central Bank of Burma till April 1947 2. The Reserve Bank of India worked as Central Bank of Pakistan till June 1948 3. The Reserve Bank of India worked as Central Bank of Bangladesh from January 1972 to December 1975 4. The Reserve Bank of India commenced its operations on April 1, 1935 
In the following question, sentences of a paragraph have been jumbled and labelled as A, B, C and D. You are required to rearrange the jumbled sentences of the paragraph and mark your response accordingly by selecting the correct option. A: RBI regulates commercial banks and non-banking finance companies working in India. B: RBI plays an important part in the Development Strategy of the Government of India. C: The Reserve Bank of India (RBI) is India's central bank, which controls the issue and supply of the Indian rupee.  D: RBI is the regulator of the entire Banking in India.
Match the items of List I with the items of List II and choose the correct answer from the code given below.   List I    List II (a)  NPA (i)  The percentage of deposits to be kept with RBI  in the form of cash. (b)  SLR (ii)  The rate at which RBI lends money to   commercial banks.  (c)  Repo Rate   (iii)  Loans and advances not paid for more than   90 days (d)  CRR (iv)  The percentage of net demand and time   liabilities to be kept in the form of liquid assets.
In the question below is given a statement followed by two courses of action numbered I and II. You have to assume everything in the statement to be true and on the basis of the information given in the statement, decide which of the suggested course of action logically follow(s) for pursuing. Statement: Reserve Bank of India has observed many discrepancies in the transactions of State Bank of India. Courses of Action: I: Reserve Bank should ask for the transaction details from other banks. II: Reserve Bank should hold the future transactions of State Bank of India till it explains the past discrepancies.