If you are also interested in financial news, then you must have heard two words Repo rate and Reverse Repo rate. So in this article, you will know the concept of Repo Rate and Reverse Repo Rate.
What is Repo rate
Whenever you borrow money from any bank, you have to pay some interest on your amount. Similarly, when commercial banks need cash, they borrow money from RBI (Reserve Bank of India in case of India) and the rate at which RBI lends money to these banks is called Repo Rate.
What is the Reverse repo rate
Similarly, many times RBI borrows money from commercial banks for the short term, so banks also get interest on it and this interest rate is called reverse repo rate.
Repo rate RBI keeps changing from time to time so that it can maintain a balance between the growth and inflation of the economy.
Current Repo rate and Reverse repo rate
Currently, the Repo rate is 4% and the Reverse Repo rate is 3.35%.
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This article is only for education purpose and the author has his own views and research, so if you invest in these stocks then do it at your own risk and do the research yourself before investing.
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FAQ
When commercial banks need cash, they borrow money from RBI (Reserve Bank of India) and the rate at which RBI lends money to these banks is called Repo Rate.
Many times RBI borrows money from commercial banks for the short term, so banks also get interest on it and this interest rate is called reverse repo rate.
The last time the RBI changed the policy rate was in May 2020. The present repo rate, at which the RBI lends short-term funds to banks is at 4%. The reverse repo rate is 3.35%.