Question

An agreement, which in fact is a contract, between the RBI and Banks for the sale and repurchase of Govt securities and short-term treasury bills at a future date and for which the RBI indicates "the interest rate", is generally known as the _______________________.

• A. REPO rate
• B. bank Rate
• C. reverse REPO rate
• D. prime lending rate

Answer 1

The correct option is A REPO rate

Repo rate is the rate charged on the secured loans offered by the Central bank to the commercial banks that includes collateral. It is usually conducted for the sale and repurchase of Govt securities and short-term treasury bills at a future date.