what is reverse repo?

Answer Posted / praneek

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 the attractive interest rates. It can cause the money to be drawn out of the banking system.

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