What is the term used for the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks?
Question
What is the term used for the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks?
Solution
The term used for the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks is called the "Repo Rate".
Here are the steps to understand this:
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The Reserve Bank of India (RBI) is the central bank of India, which controls the monetary policy of the Indian rupee.
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The RBI lends money to commercial banks in the event of any shortfall of funds.
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The interest rate at which the RBI lends money to commercial banks is known as the Repo Rate.
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If the Repo Rate is increased, borrowing from RBI becomes more expensive. If Repo Rate is decreased, borrowing from RBI becomes cheaper.
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The Repo Rate is used by monetary authorities to control inflation.
Similar Questions
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