Rate at which the Central Bank grants loans to commercial banks against government securities is called A. Reverse Repo Rate B. Repo Rate C. Bank Rate D. GDP at Market Price
Question
Rate at which the Central Bank grants loans to commercial banks against government securities is called A. Reverse Repo Rate B. Repo Rate C. Bank Rate D. GDP at Market Price
Solution
The rate at which the Central Bank grants loans to commercial banks against government securities is called B. Repo Rate.
Here's a step-by-step explanation:
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The Central Bank is the monetary authority of a country that manages the country's money supply and interest rates.
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Commercial banks are financial institutions that provide various services like accepting deposits, providing business loans, and offering basic investment products.
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Government securities are bonds issued by a government to support government spending and obligations.
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The Central Bank uses various tools to control the money supply and interest rates in the economy. One such tool is the Repo Rate.
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The Repo Rate is the rate at which the Central Bank lends money to commercial banks in the event of any shortfall of funds. The commercial banks sell securities to the Central Bank with an agreement to repurchase them at a predetermined date and rate.
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Therefore, the rate at which the Central Bank grants loans to commercial banks against government securities is called the Repo Rate.
Similar Questions
What do we call the rate at which the Reserve Bank of India lends money to commercial banks?a.Repo Rateb.Reverse Repo Ratec.CRRd.SLR
Bank rate is for a) Commercial banks by the government b) Commercial banks by the central bank c) Central banks by the central banks d) Central Bank by the commercial banks
The discount rate is the interest rate at which: A. Commercial banks lend to the central bank B. The central bank borrows from commercial banks C. The central bank borrows from the government D. The government borrows from commercial banks
Which of the statements gives an accurate picture of the effect of the rise of the reverse repo rate by the central bank of a country?The demand for goods and services in the country will decreaseThe demand for goods and services in the country will increaseThe demand for goods and services in the country may increase or decreaseThere is no effect on the demand for goods and services in the country
What is the term used for the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks?
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