Repo rate is the interest rate at which the reserve bank of 
India lends mney to other banks.

Reverse repo rate is return banks earn on excess funds 
parked with the central bank against Government securities.

Repo rate is the discounting rate at which central bank 
borrows security from commercial bank.Repo means repurchase 
agreement b/w RBI &commercial bank.

Reverse repo is the rediscounting rate at which commercial 
bank borrows discounted security from central bank ie RBI.

repo rate is the rate at which RBI lends money to other 
commercial banks.



and Reverse repo rate as the name suggests is the Rate at 
which RBI borrows from other commercial banks.

Discount rate at which a central bank repurchases 
government securities from the commercial banks, depending 
on the level of money supply it decides to maintain in the 
country's monetary system. To temporarily expand the money 
supply, the central bank decreases repo rates (so that 
banks can swap their holdings of government securities for 
cash), to contract the money supply it increases the repo 
rates.

Alternatively, the central bank decides on a desired level 
of money supply and lets the market determine the 
appropriate repo rate.

Meaning of epo Rate-A repo or more broadly, a repurchase 
agreement, is normally a contract through which a seller of 
securities promises to buy them back at a later date for a 
mutually agreed price. Overnight repo, term repo, reverse 
repo, purchase agreement, buyback, and leaseback are some 
of the other related terms used in these kinds of 
operations.

Financial instruments like treasury or government bills, 
treasury/government or corporate bonds, and stocks/shares 
are offered as securities in a repurchase agreement. 
Typically, in this agreement, a prospective seller submits 
the instruments for cash, with a promise to repurchase them 
from the buyer at a specified time. The sum being repaid is 
always greater than the sum received at the time of 
agreement. The difference amount is termed as repo rate.

A repo differs marginally from a loan transaction. While 
taking a loan, the debtor places the instruments under a 
lien to the lender. Physical possession of the securities 
lies with the lender during the tenancy of the loan. When 
the loan is fully settled, the borrower gets back the 
ownership of the securities. If the debtor fails to clear 
the loan, the lender can dispose of the securities to 
recover the dues. If the sale value of the securities is 
lesser than the total loan amount, the creditor holds the 
legal right to recover the balance amount from the debtor.

In the case of a repo, the cash provider can liquidate the 
securities if the seller defaults in the repurchase of the 
instruments. However, the repo buyer cannot recover the 
full amount, if the sale value of the securities is lesser 
than the cash lent originally. This can happen if the 
instruments had depreciated in value during the repo 
agreement period. On the other hand, if the securities had 
appreciated during that period, the buyer stands to make a 
fair profit. Thus, a repo transaction carries a definite 
element of risk. Normally, repos are invariably 
overcollateralized to reduce the amount of risk involved. 
Daily market-to-market margining is also resorted to in 
repo agreements.

We are explaining the different rates in monetary policy 
used by RBI

Repo (Repurchase) Rate

Repo rate is the rate at which banks borrow funds from the 
RBI to meet the gap between the demand they are facing for 
money (loans) and how much they have on hand to lend. 

If the RBI wants to make it more expensive for the banks to 
borrow money, it increases the repo rate; similarly, if it 
wants to make it cheaper for banks to borrow money, it 
reduces the repo rate. 

Reverse Repo Rate

This is the exact opposite of repo rate. 

The rate at which RBI borrows money from the banks (or 
banks lend money to the RBI) is termed the reverse repo 
rate. The RBI uses this tool when it feels there is too 
much money floating in the banking system

If the reverse repo rate is increased, it means the RBI 
will borrow money from the bank and offer them a lucrative 
rate of interest. As a result, banks would prefer to keep 
their money with the RBI (which is absolutely risk free) 
instead of lending it out (this option comes with a certain 
amount of risk)

Consequently, banks would have lesser funds to lend to 
their customers. This helps stem the flow of excess money 
into the economy

Reverse repo rate signifies the rate at which the central 
bank absorbs liquidity from the banks, while repo signifies 
the rate at which liquidity is injected.

Bank Rate

This is the rate at which RBI lends money to other banks 
(or financial institutions .

The bank rate signals the central bank’s long-term outlook 
on interest rates. If the bank rate moves up, long-term 
interest rates also tend to move up, and vice-versa.

Banks make a profit by borrowing at a lower rate and 
lending the same funds at a higher rate of interest. If the 
RBI hikes the bank rate (this is currently 6 per cent), the 
interest that a bank pays for borrowing money (banks borrow 
money either from each other or from the RBI) increases. 
It, in turn, hikes its own lending rates to ensure it 
continues to make a profit. 

Call Rate

Call rate is the interest rate paid by the banks for 
lending and borrowing for daily fund requirement. Si nce 
banks need funds on a daily basis, they lend to and borrow 
from other banks according to their daily or short-term 
requirements on a regular basis. 

CRR

Also called the cash reserve ratio, refers to a portion of 
deposits (as cash) which banks have to keep/maintain with 
the RBI. This serves two purposes. It ensures that a 
portion of bank deposits is totally risk-free and secondly 
it enables that RBI control liquidity in the system, and 
thereby, inflation by tying their hands in lending money

SLR

Besides the CRR, banks are required to invest a portion of 
their deposits in government securities as a part of their 
statutory liquidity ratio (SLR) requirements. What SLR does 
is again restrict the bank’s leverage in pumping more money 
into the economy.

Repo means purchase of one loan and sale of another.Itis
from one day to fourteen days. They involve the sale of
securites against cash with a future buy back agreement.
under such agreement, the seller sells specified securities
with an agreement to repurchase the same at a mutually
decided future date and price. similarly, the buyer purchase
the securities with an agreement to resell the same to the
seller on an agreeed  date at a predetermined price. the
transaction is called "REPO. The difference between actually
received and paid is calculated in percentage it is called
"REPO RATE"
            Repos are part of open market operations
undertakne to influence short-term liquidity.
                Repo is viewed from the perspective of the
seller of the securities, and Reverse Repo when viewed from
the perspective of the buyer of the securities

A Repurchase agreement (also known as a repo or Sale and 
Repurchase Agreement) allows a borrower to use a financial 
security as collateral for a cash loan at a fixed rate of 
interest. In a repo, the borrower agrees to immediately 
sell a security to a lender and also agrees to buy the same 
security from the lender at a fixed price at some later date
A Reverse Repo is simply the same repurchase agreement from 
the buyer's viewpoint, not the seller's. Hence, the seller 
executing the transaction would describe it as a 'repo', 
while the buyer in the same transaction would describe it 
a 'reverse repo'. So 'repo' and 'reverse repo' are exactly 
the same kind of transaction, just described from opposite 
viewpoints.

Repo rate means the percentage at which RBI lends money to
other banks.
 And reverse repo rate means the interest rate which the
other banks get by depositing their money to RBI.

Repo rate is the rate at which the banks can borrow money 
from a central bank of the country in order to avoid 
scarcity of funds.For eg, whenever the banks have any 
shortage of funds they can borrow it from Reserve Bank of 
India (RBI). Thus Repo rate is the rate at which our banks 
borrow rupees from RBI. A reduction in the repo rate will 
help banks to get money at a cheaper rate. When the repo 
rate increases borrowing from RBI becomes more expensive. 
It is also a financial & economic tool in the hands of 
government to control the availability of money supply in 
the market by altering the repo rate from time to time.

Reverse repo rate is return banks earn on excess funds 
parked with the central bank against Government securities

Repo rate is the interest rate at which the reserve bank of 
India lends mney to other banks.

Reverse repo rate is return banks earn on excess funds 
parked with the central bank against Government securities.

repo rate is a rate which RBI lends to other bank.



reverse repo rate is rate that which RBI takes the money 
from other bank of excess fund

Repo (Repurchase) rate is the rate at which the RBI lends 
shot-term money to the banks. When the repo rate increases 
borrowing from RBI becomes more expensive.  Therefore, we 
can say that in case,  RBI wants to make it more expensive 
for the banks to borrow money, it increases the repo rate; 
similarly, if it wants to make it cheaper for banks to 
borrow money, it reduces the repo rate.

Reverse Repo rate is the rate at which banks park their 
short-term excess liquidity with the RBI.  The RBI uses 
this tool when it feels there is too much money floating in 
the banking system.  An increase in the reverse repo rate  
means that the RBI will borrow money from the banks at a 
higher rate  of interest.

repo rate means repo rate and reverse means the reverse of 
tha same

the current repo rate is 4.75% and the reverse repo rate is 
3.25%