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what is the effect of repo rate
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Answer Posted / chalapathi rao govada
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.
One more clarification ot you as a value addition........
Reverse Repo rate:
Reverse Repo rate is the rate at which Reserve Bank of
India (RBI) borrows money from banks. Banks are always
happy to lend money to RBI since their money are in safe
hands with a good interest. An increase in Reverse repo
rate can cause the banks to transfer more funds to RBI due
to this attractive interest rates. It can cause
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