What is the difference between bank rates & repo rates?
-Gyanranjan
The repo rate is the rate at which banks borrow funds from the Reserve Bank of India (RBI) to fulfill their short-term requirements. The reverse repo rate is the opposite of that, the rate at which a bank lends to the RBI. These rates are benchmark rates, on the basis of which other deposit and lending rates are set. The rate at which RBI borrows or lends funds to bank is an important reference in the banking system.
This article was originally published on January 30, 2012.
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