What is repo rate and reverse repo rate?

Published: 03rd Dec 2024 By: Value Research 2 key bank rates that affect your money

What is repo rate?

[{"selector":"#anim-a7803a0f-683c-4a19-88c2-fdbe08218968","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-02bf59c3-a05f-4470-a309-e8016dad89b0","keyframes":{"transform":["translate3d(-114.73355%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-78c0f40b-20a2-475c-8671-74827c6a05ad","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-e6eecf7a-3a14-4c32-85a6-c9bd57bd7471","keyframes":{"transform":["translate3d(-115.65495%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. Think of it as the 'cost of money' for banks. When banks need money, they borrow from the RBI by keeping government securities as collateral.

What is reverse repo rate?

[{"selector":"#anim-f0c3fe2b-b99c-4f48-b624-e58c2158dd60","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8114433e-9d5c-4bd5-b336-3d4e3ae75359","keyframes":{"transform":["translate3d(-115.3605%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-6c9b615b-ec37-40a2-a688-92a3b692f8aa","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-3ea711c3-9b89-4406-bba9-d99f7fb3b2dd","keyframes":{"transform":["translate3d(-115.65495%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] It is the opposite–the rate at which RBI borrows money from banks. When banks have excess funds, they can deposit it with the RBI and earn this interest rate. It's always lower than the repo rate.

How do they affect you?

[{"selector":"#anim-23c09868-f15d-42a3-815d-a3733fdc6c29","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d4b34a33-0f64-4832-adf3-dbcc6efe6592","keyframes":{"transform":["translate3d(-114.73355%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-633f49df-5e75-41b1-8f5b-06dcfa38ba3f","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a6817201-1d2c-4b59-83d4-6ba36cbe93e5","keyframes":{"transform":["translate3d(-115.65495%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] A high repo rate means higher interest rates for loans for customers. A high reverse repo rate encourages banks to park money with the RBI, impacting lending and liquidity.

Current rates

[{"selector":"#anim-0627a586-a8cc-4296-a706-fd0d92c8ac6a","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c8b758b2-caf8-474a-9cce-7e888a0aeb30","keyframes":{"transform":["translate3d(-114.73355%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-beedbd5f-c671-43c2-835a-b903833b29c5","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-11db8030-fda8-46d9-970d-2754f800ddc1","keyframes":{"transform":["translate3d(-115.65495%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Current repo rate in India is 6.5 per cent Current reverse repo rate in India is 3.35 per cent

5 SIP investment myths debunked | SIP myths busted

[{"selector":"#anim-205e5703-bd49-417c-97d5-ff1b7f950bd6","keyframes":{"opacity":[0,1]},"delay":200,"duration":1000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-84819c44-8313-47dd-9692-de37f6b97fbf","keyframes":{"transform":["translate3d(-125.51724%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":200,"duration":1000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d7992200-e2e3-4545-b62e-1bb2a60ea0fb","keyframes":{"opacity":[0,1]},"delay":300,"duration":2000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-cfe152ad-29fd-4bb5-a9b6-7c5265c8173f","keyframes":{"opacity":[0,1]},"delay":400,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-11de155c-9a15-418c-86df-eb43886397aa","keyframes":{"transform":["translate3d(-194.52735%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":400,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-2b2c841d-90ec-4dce-b2d8-b65846ac2573","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-38a56aa5-c979-43fc-b490-10bc00928456","keyframes":{"transform":["translate3d(-125.51724%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Other Webstories To find more such stories & Web-stories, visit our website Value Research Online