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what is repo rate?
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Answer Posted / somnath maity
repo rate is the rate at which rbi discount securities like
treasury bill to the bank. To meet certain liquidity
standards ,from time to time, banks sell their securities
like treasury bills to rbi at a discount price called
reporate ,for a short period of time like overnight or fort
night . after specified time banks repurchase the bill at
its face value. so high repo rate high loss for banks or
hike in reporate absorbe liquidity from the market by less
lending to the banks, which in turn tame inflation.
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