what is the difference between bank rate and repo rate?
Answers were Sorted based on User's Feedback
Answer / encyclopedia
Both are basically the same. The Bank rate is the rate at
which commercial banks, which are temporarily short of
cash, can borrow from the Central Bank.The repo rate
enables holders of Securities, principally commercial
banks, to acquire funds from the Central Bank by selling
the securities and at the same time agreeing to repurchase
them at a later date at a predetermined price.
Increases in these rates indicate a desire for a
contraction in credit while decreases reflect a relaxation
of interest rate policy.
| Is This Answer Correct ? | 17 Yes | 5 No |
Answer / anshuman
Repo Rate is the rate at which banks borrow funds from the
RBI, it is a short term measure usually of 15 days currently
the repo rate aka repurchase rate is 5 percent.
Bank rate is the rate at which banks take long term loans
from the RBI, currently it is at 6 percent. The banks than
give these loans to people and charge higher interest as
margin for the risk that is incurred and also for their margin.
| Is This Answer Correct ? | 12 Yes | 1 No |
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.
| Is This Answer Correct ? | 6 Yes | 1 No |
Answer / rahul sharma
repo rate is a short-term measure, i.e. applicable to short-
term loans and used for controlling the amount of money in
the market,
bank rate is a long-term measure and is governed by the
long-term monetary policies of the governing bank concerned.
| Is This Answer Correct ? | 7 Yes | 3 No |
Answer / nikhil kabra
Repo rate :- If bank borrow money from RBI for short-term period is called Repo rate.
Bank rate:- If bank borrow money from RBI for long term period is called bank rate.
| Is This Answer Correct ? | 0 Yes | 0 No |
Answer / rahul mallya
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| Is This Answer Correct ? | 1 Yes | 6 No |
Answer / robin
the rate at which banks offer loan to the market is bank
rate nd the rate at which rbi offer loans to commercial
banks is repo rate
| Is This Answer Correct ? | 30 Yes | 36 No |
Answer / aswini nayak
Bank Rate is the rate charged by banks to other banks.
Normally when any banks faces liquid problem it approches
other banks for short term loan. So in that case the rate
is called bank rate. Repo rate is the rate charged by RBI
when it lends to commercial banks.
| Is This Answer Correct ? | 2 Yes | 11 No |
Answer / himanshu
The rate at which commercial baks charge interest from
their customers is bank rate and the rate which is charged
by RBI to lend short term loans to commercial banks is repo
rate.
Repo rate is 5.5 % these days
| Is This Answer Correct ? | 6 Yes | 18 No |
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