is the interest rate at which the Reserve Bank absorbs liquidity from banks against the collateral ...........

General Studies (CPO) Indian Economy

_____ is the interest rate at which the Reserve Bank absorbs liquidity from banks against the collateral of eligible government

securities under the LAF.

This questions was previously asked in

SSC CPO 9th Nov 2022 Shift 2

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SDF Rate

Reverse Repo Rate

Bank Rate

Repo Rate

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Explanation:

- Option 1: SDF Rate - The Standing Deposit Facility (SDF) Rate is a tool for absorbing liquidity without requiring collateral. It's different from the reverse repo, which involves collateral.

- Option 2: Reverse Repo Rate - This is the interest rate at which the Reserve Bank of India absorbs liquidity from banks in exchange for eligible government securities. It's part of the Liquidity Adjustment Facility (LAF).

- Option 3: Bank Rate - The Bank Rate is the rate at which the central bank lends money to commercial banks without any security.

- Option 4: Repo Rate - The Repo Rate is the rate at which the central bank lends money to commercial banks against the collateral of government securities.