What is the meaning of Repo Rate ........

Economic Affairs Money Supply and Monetary Policy

What is the meaning of Repo Rate?

When a bank is in need of cash it can it can discount bills of exchange and avail loan facilities from Reserve Bank of India.

When a bank has excess cash, they buy securities from RBI against cash on the condition that they resell the securities to RBI on a pre fixed day and price

It is rate at which RBI allows temporary loan facilities to commercial banks against government securities on the condition that the bank will repurchase the securities within a short period.

It is a rate which is offered by banks to their most valued customers or prime customers.

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Explanation:

Repo rate is the rate at which RBI lends to its clients generally against government securities. Reduction in Repo rate helps the commercial banks to get money at a cheaper rate and increase in Repo rate discourages the commercial banks to get money as the rate increases and becomes expensive.