Reverse Repo

Posted in Finance, Accounting and Economics Terms, Total Reads: 984

Definition: Reverse Repo

Reverse repo is the rate at which the country’s central bank (in case of India it is RBI) borrows money from country’s commercial banks.

If the reverse repo rate is higher the commercial banks will be willing to lend more and more money to the central bank. In such a situation money will be drawn out of the market which will result in less money circulation.

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