Answer / hitendra kumar virani

Commercial banks need a large sum of money to operate its
daily routine operations smoothly. For this purpose banks
borrow money from Reserve Bank of India for an overnight
period.On this borrowed money those have to pay interest at
a fixed rate which is known as REPO RATE.

Answer / atul gupta

the rate at which rbi lends fund to the banks.

Answer / dinesh todi

repo rate is the rate at which bank borrows money from RBI
and it is a way through which rbi injects liquidity in the
economy

Repo and Reverse Repo are tools available in the hands of
RBI to manage the liquidity in the system. It either
injects liquidity into the market if the conditions are
tight or sucks out liquidity if the liquidity is excess in
the system through the Repo and Reverse Repo mechanism,
besides a host of other measures.

Now in REPO RBI injects liquidity into the system i.e. it
purchases the securities from the banks and lends money to
them to ease their liquidity crunch. The rate charged by it
for lending money is the REPO rate.

Reverse REPO is the opposite of REPO: When liquidity is
excess in the system. RBI sucks it out by Reverse REPO by
lending securities and taking out money from banks. The
rate charged for it is the Reverse Repo rate.
These rates, form the bottom and the top of the Call money
lending/borrowing of the banks. The call money rates
generally fall in between this corridor.

Answer / madhavi

when the banks have any shortage of funds they can borrow
form rbi through interest. this interest is called repo rate

Answer / rohitash sharma

When ever banks need funds they can borrow money from RBI
and RBI lends this fund on certain rate of interest.this
rate of interest is called REPO RATE.

Answer / zafar

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

Answer / ganesan.p

Whenever the scheduled commercial banks in Indi face the
shortage of funds, that time the commercial banks tend to
borrow the money from the RBI. The Repo rate which is
defined that the rate of the RBI fixed to its cliends
(Commercial Banks) as a interest rate. According to this
rate the commercial banks are tend to borrow the money from
the RBI. Incase of the REPO rate will increase, the lending
rates of commercial banks are also increased.

Answer / anie

Whenever the banks have any shortage of funds they can
borrow it from RBI. 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.

Answer / leena

Whenever the banks have any shortage of funds they can
borrow it from RBI. 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.

Answer / pranjal

A repo or repurchase Agreement is an instrument of money market. Usually reserve bank (federal bank in U.S) and commercial banks involve in repo transactions but not restricted to these two. Individuals, banks, financial institutes can also participate in repurchase agreement.
Repo is a collateralized lending i.e. the banks which borrow money from Reserve Bank to meet short term needs have to sell securities, usually bonds to Reserve Bank with an agreement to repurchase the same at a predetermined rate and date. In this way for the lender of the cash (usually Reserve Bank) the securities sold by the borrower are the collateral against default risk and for the borrower of cash (usually commercial banks) cash received from the lender is the collateral.
Reserve bank charges some interest rate on the cash borrowed by banks. This rate is usually less than the interest rate on bonds as the borrowing is collateral. This interest rate is called ‘repo rate’. The lender of securities is said to be doing repo whereas the lender of cash is said to be doing ‘reverse repo’.
In a reverse repo Reserve Bank borrows money from banks by lending securities. The interest paid by Reserve Bank in this case is called reverse repo rate.
Borrower of funds is called as seller of repo and lender of funds is called as buyer of repo. When the term of the loan is for one day it is known as an overnight repo and if it is for more than one day it is called a term repo.
The forward clean price of bonds is set at a level which is different from the spot clean price by adjusting the difference between repo rate and coupon earned on the security.

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