what is the difference between repo rate and bank or
discount rate ?
and
as discount rate are determined by central bank is repo rate
is determined by MPC monitary policy comittee?
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Answer Posted / remya v.s
Both bank rate and repo rate serve the same purpose for
meeting the liquidity needs of the commercial banks.Both the
rates are determined by RBI in accordance with the money
supply in the market.The only difference between the two
are,in REPO RATE, there is sale of security to RBI on an
agreement to" repurchase" it at a future date at
predetermined price.That is why the term REPO means
"REPURCHASE AGREEMENT".Whereas in BANK RATE, there is no
such sale or repurchase agreement.It takes place as mere
lending of money to commercial banks at fixed rate ,i.e the
bank rate.
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