Repo Rate

Posted in Finance, Accounting and Economics Terms, Total Reads: 1401

Definition: Repo Rate

Repo rate is the rate at which the Reserve Bank of India (RBI) lends money to the commercial banks.

If the repo rate is high then the money circulation in the country will be low. It is so because it will become costly for commercial banks to borrow money from the RBI.

The commercial bank will pass this increase cost to the borrower in terms of increasing the lending rate. As the lending rate increases the borrower borrows less money as it becomes costly for him/her. The opposite happens when the repo rate is lower.

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