Answer Posted / utpal
Repo or Repurchase 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.
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, 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.
Is This Answer Correct ? | 2 Yes | 0 No |
Post New Answer View All Answers
Plz. send me a interview question related to SBI clerical.
How is Economy,Industry and Company analysis is carried out by the Fundamental Investor?
How is future growth of SEBI in India and any hurdles to it ?
What do you think is going to happen with interest rates over the next six months?
How is your professional knowledge useful for the banking Sector?
What's Selling gold coins,insurance,mutual funds?
Comment on Make in India scheme launched by the Modi government?
Suppose to top five gainers on BSE same company can loser on NSE?
Tell me the two types of orders issuers may issues in equity trading?
Who is the Governor, Chief Minsiter and Other Ministers of Your State (Like Education, Tourism Ministers)?
Which was the first indian bank to get an iso certification?
What are FDI (Foreign direct investment) and FII (Foreign institutional investors) and what is the difference in these?
What is the difference between nationalized banks and private banks?
Discuss on consumer credit card.
Where do you see the Euro in 2018?