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
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.
College Comparison based on Courses, Placement, Rank, Fee
Question : The interest rate at which the Reserve Bank of India provides overnight liquidity to banks is called ________.
Option 1: Reverse repo rate
Option 2: Marginal standing facility rate
Option 3: Repo rate
Option 4: Leverage rate
Question : _____________is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks of the country.
Option 1: Reserve Repo Rate
Option 2: Base Rate
Option 3: Marginal Rate
Option 4: Repo Rate
Question : The rate at which the Reserve Bank of India lends to other commercial banks for the short term has been reduced. What is this rate called?
Option 1: Cash Reserve Rate
Option 2: Reverse Repo Rate
Option 3: Bank Rate
Question : The central bank of India is ___________.
Option 1: Reserve Bank of India (RBI)
Option 2: State Bank of India (SBI)
Option 3: Punjab National Bank (PNB)
Option 4: ICICI Bank
Question : Reserve Bank of India (RBI) was established in the year:
Option 1: 1947
Option 2: 1950
Option 3: 1935
Option 4: 1921
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile