Question : The repo rate is the rate at which:
Option 1: Banks borrow from the RBI
Option 2: The RBI borrows from the banks
Option 3: Banks borrow from each other
Option 4: None of the above
Correct Answer: Banks borrow from the RBI
Solution : The correct answer is (a) Banks borrow from the RBI.
The repo rate is the rate at which banks borrow funds from the Reserve Bank of India (RBI). When banks face a shortage of funds, they can borrow money from the RBI by pledging government securities as collateral. The repo rate determines the cost at which banks can borrow short-term funds from the central bank. It serves as a tool for the RBI to regulate liquidity in the banking system and control inflation.
Question : What is the meaning of reverse repo rate?
Option 1: The rate at which RBI borrows money from foreign banks.
Option 2: The rate at which RBI borrows money from commercial banks.
Option 3: The rate at which commercial banks borrow money from RBI.
Option 4: The rate at which commercial banks borrow money from foreign banks.
Question : The bank rate is the rate at which:
Option 1: RBI borrows from commercial banks
Option 2: RBI lends to commercial banks
Option 3: Commercial banks lend to customers
Option 4: Commercial banks borrow from RBI
Question : The rate at which the RBI borrows from commercial banks is called:
Option 1: CRR
Option 2: SLR
Option 3: Repo rate
Option 4: Reverse repo rate
Question : The interest rate at which the RBI borrows money from banks is called:
Option 1: Reverse Repo Rate
Option 2: Repo Rate
Option 3: Bank Rate
Option 4: Savings Rate
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
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