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Multiple Choice Questions

Which among the following defines Repo Rate ........

Economic and social issues (RBI) Monetary and fiscal policies

Which among the following defines Repo Rate?

The rate at which banks place their surplus funds with the RBI

The rate at which banks can borrow against their excess SLR securities to meet additional liquidity requirements

The rate at which the Reserve Bank is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase

. The rate at which banks borrow funds from the Reserve Bank against eligible collaterals

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Explanation:

Repo rate is the rate at which banks borrow funds from the Reserve Bank against eligible collaterals under the liquidity adjustment facility (LAF). Repo rate refers to the rate at which commercial banks borrow money by selling their securities to the Central bank of our country i.e Reserve Bank of India (RBI) to maintain liquidity, in case of shortage of funds or due to some statutory measures. It is one of the main tools of RBI to keep inflation under control.

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