What is Repo Rate and Reverse Repo Rate ?

#1. Information About Repo Rate and Reverse Repo Rate

Most of the people or in the newspapers are informed about the low and high of repo rate and reverse repo rate. Due to this fluctuations in the market are also seen, but we do not get complete information about it. 

Banks in India are controlled by the Reserve Bank of India. Repo rate is also announced by RBI. If you do not know about Repo Rate, then on this page Repo Rate and Reverse Repo Rate are being told.

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#2. What is Repo Rate ?

Reserve Bank of India gives loans to all the banks in India. The rate at which the loan is given by RBI is called Repo Rate. After taking the bank loan, they provide loan to their customers. If the repo rate is low or high, it directly affects the customers taking loans from the bank. 

If the repo rate is reduced, the loan to the customers becomes cheaper. If the repo rate goes up, then the loan from the banks becomes expensive.

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#3. What is Reverse Repo Rate ?

When there is excess cash in the banks, it is deposited with the Reserve Bank of India. RBI gives interest to banks for this. The rate at which it pays interest to the bank is called reverse repo rate. This reverse repo rate is used to control the liquidity of cash in the market. 

When there is more liquidity in the market, at that time RBI increases the reverse repo rate to reduce the liquidity. After this, all the banks deposit their money with RBI to get more interest, which reduces the cash in the market.

Here we have provided you information about Repo Rate and Reverse Repo Rate, if you have any kind of question related to this information, or get any other information related to it. If you want to do it, then you can ask through the comment box, we are waiting for your feedback and suggestions.