The repo rate, or repurchase rate, is the rate at which central banks lend to commercial banks , usually against government securities. It is an essential monetary policy tool, affecting the money supply and overall economic activity. The repo rate is the interest rate at which the central bank of a country lends credit to banks and financial institutes . The repo rate is an important tool used by the Reserve Bank of India (RBI) to manage the flow of money in the economy. It directly affects how much interest banks charge on loans and offer on deposits. The repo rate refers to the rate at which central banks lend short-term credit to commercial banks in exchange for collateral . Its purpose is to deal with the shortage of funds faced by banks in the financial market. The repo rate is a useful instrument for central banks to regulate the money supply in a market. Learn the meaning of repo rate , who decides it, and its impact of loans, EMIs, and the Indian economy. The repo rate is one of the most important terms in banking and finance, often making...
