8 Views

Question :  ___________ is the interest rate at which banks can borrow overnight funds from the Reserve Bank of India (RBI).

 

Option 1: Bank rate

Option 2: Repo rate

Option 3: Reverse repo rate

Option 4: Prime rate


Recommended : Get important details about BEL First Grade College, Bangalore. Download Brochure
Team Careers360 23rd Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: Repo rate


Solution : The repo rate is the interest rate at which the RBI lends money to commercial banks against the collateral of government securities. This means that banks can borrow money from the RBI by selling their government securities to the RBI, and then repurchase the securities at a later date. The repo rate is used by the RBI to control liquidity in the banking system. When the RBI wants to increase liquidity in the banking system, it lowers the repo rate, which makes it cheaper for banks to borrow money from the RBI. When the RBI wants to decrease liquidity in the banking system, it raises the repo rate, which makes it more expensive for banks to borrow money from the RBI.

Therefore, the interest rate at which banks can borrow overnight funds from the Reserve Bank of India (RBI) is the repo rate.

Compare Colleges

College Comparison based on Courses, Placement, Rank, Fee

Compare Now

Know More About

Related Questions

Amity University | BCA Admiss...
Apply
Ranked amongst top 3% universities globally (QS Rankings)
Amity University, Noida BBA A...
Apply
Ranked amongst top 3% universities globally (QS Rankings)
Amity University, Noida B.Com...
Apply
Ranked as India’s #1 Not for profit pvt. University by India Today
Amity University Admissions 2025
Apply
Amongst top 3% universities globally (QS Rankings) | Ranked as India’s #1 Not for profit pvt. University by India Today
Graphic Era (Deemed to be Uni...
Apply
NAAC A+ Grade | Among top 100 universities of India (NIRF 2024) | 40 crore+ scholarships distributed
UEI Global, Hotel Management ...
Apply
Training & Placement Guarantee | Top Recruiters: The Oberoi, Taj, Lee Meridien, Hyatt and many more
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books