Which one among the following is correct about the Repo Rate in the Indian Economy?

It is the rate at which banks borrow funds from the RBI

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It is the rate at which banks park their funds with the Central Bank

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It is the percentage difference in the prices of repurchase of the bills from the original prices

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Both 'a' and 'c'

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Solution

The correct option is D Both 'a' and 'c'
Repo rate is a mechanism under the Liquidity Adjustment Facility (LAF) under which the banks borrow money from the Central Bank using Government securities as the collateral, with an obligation to buy back the securities later.

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Similar questions

Q.  Repo rate or repurchase rate is referred to as the rate at which the central bank (RBI) lends money to the commercial banks for meeting short-term fund requirements in order to maintain liquidity

Q. Select the correct statement/s about REPO rates:

1) Rate at which RBI lends commercial banks for securities

2) Banks ensure repurchase of securities

50. Identify the correct statements.

1. Marginal Standing Facility (MSF) Rate: It is rate at which the scheduled banks can borrow funds overnight from RBI against government securities

2. Statutory Liquidity Ratio (SLR): It is amount that banks have to maintain a stipulated proportion of their net demand and time liabilities (NDTL) in the form of liquid assets like cash, gold and unencumbered securities, treasury bills, dated securities etc.

Q. Q. Consider the following statements with respect to Repo Rate:Which of the statements given above is/are correct?

1 only
2 only
Both 1 and 2
Neither 1 nor 2

Q. Bank Rate is the rate at which central bank discounts the bills of commercial banks.

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Which one among the following is correct about the Repo Rate in the Indian Economy?

The correct option is D Both 'a' and 'c'Repo rate is a mechanism under the Liquidity Adjustment Facility (LAF) under which the banks borrow money from the Central Bank using Government securities as the collateral, with an obligation to buy back the securities later.

The correct option is D Both 'a' and 'c'
Repo rate is a mechanism under the Liquidity Adjustment Facility (LAF) under which the banks borrow money from the Central Bank using Government securities as the collateral, with an obligation to buy back the securities later.