Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo rate is the interest rate 3 Sonali

# 1 at which the reserve bank of
India lends mney to other
banks.

Reverse repo rate is return

banks earn on excess funds
parked with the central bank
against Government securities.

Is This Answer 267 Yes 43 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo rate is the discounting 4 Atul Juyal
# 2 rate at which central bank
borrows security from
commercial bank.Repo means
repurchase
agreement b/w RBI &commercial
bank.

Reverse repo is the

rediscounting rate at which
commercial
bank borrows discounted
security from central bank ie
RBI.

Is This Answer 81 Yes 108 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer repo rate is the rate at which 3 Inder Singh
# 3 RBI lends money to other
commercial banks.

and Reverse repo rate as the

name suggests is the Rate at
which RBI borrows from other
commercial banks.
 Is This Answer 101 Yes 29 No
Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Discount rate at which a 0 Shrikant Ramchandra
# 4 central bank repurchases
Gadade
government securities from the
commercial banks, depending
on the level of money supply
it decides to maintain in the
country's monetary system. To
temporarily expand the money
supply, the central bank
decreases repo rates (so that
banks can swap their holdings
of government securities for
cash), to contract the money
supply it increases the repo
rates.

Alternatively, the central

bank decides on a desired
level
of money supply and lets the
market determine the
appropriate repo rate.

Is This Answer 31 Yes 19 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Meaning of epo Rate-A repo or 0 Shrikant.ramchandra.gadade
# 5 more broadly, a repurchase
agreement, is normally a
contract through which a
seller of
securities promises to buy
them back at a later date for
a
mutually agreed price.
Overnight repo, term repo,
reverse
repo, purchase agreement,
buyback, and leaseback are
some
of the other related terms
used in these kinds of
operations.

Financial instruments like

treasury or government bills,
treasury/government or
corporate bonds, and
stocks/shares
are offered as securities in a
repurchase agreement.
Typically, in this agreement,
a prospective seller submits
the instruments for cash, with
a promise to repurchase them
from the buyer at a specified
time. The sum being repaid is
always greater than the sum
received at the time of
agreement. The difference
amount is termed as repo rate.

A repo differs marginally from

a loan transaction. While
taking a loan, the debtor
places the instruments under a
lien to the lender. Physical
possession of the securities
lies with the lender during
the tenancy of the loan. When
the loan is fully settled, the
borrower gets back the
ownership of the securities.
If the debtor fails to clear
the loan, the lender can
dispose of the securities to
recover the dues. If the sale
value of the securities is
lesser than the total loan
amount, the creditor holds the
legal right to recover the
balance amount from the
debtor.

In the case of a repo, the

cash provider can liquidate
the
securities if the seller
defaults in the repurchase of
the
instruments. However, the repo
buyer cannot recover the
full amount, if the sale value
of the securities is lesser
than the cash lent originally.
This can happen if the
instruments had depreciated in
value during the repo
agreement period. On the other
hand, if the securities had
appreciated during that
period, the buyer stands to
make a
 fair profit. Thus, a repo
transaction carries a definite
element of risk. Normally,
repos are invariably
overcollateralized to reduce
the amount of risk involved.
Daily market-to-market
margining is also resorted to
in
repo agreements.

Is This Answer 27 Yes 7 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer We are explaining the 4 Amar Vyas
# 6 different rates in monetary
policy
used by RBI

Repo (Repurchase) Rate

Repo rate is the rate at which

banks borrow funds from the
RBI to meet the gap between
the demand they are facing for
money (loans) and how much
they have on hand to lend.

If the RBI wants to make it

more expensive for the banks
to
borrow money, it increases the
repo rate; similarly, if it
wants to make it cheaper for
banks to borrow money, it
reduces the repo rate.

Reverse Repo Rate

This is the exact opposite of

repo rate.

The rate at which RBI borrows

money from the banks (or
banks lend money to the RBI)
is termed the reverse repo
rate. The RBI uses this tool
when it feels there is too
much money floating in the
banking system

If the reverse repo rate is

increased, it means the RBI
will borrow money from the
bank and offer them a
lucrative
rate of interest. As a result,
banks would prefer to keep
their money with the RBI
(which is absolutely risk
free)
instead of lending it out
(this option comes with a
certain
amount of risk)

Consequently, banks would have

lesser funds to lend to
their customers. This helps
stem the flow of excess money
into the economy

Reverse repo rate signifies

the rate at which the central
bank absorbs liquidity from
the banks, while repo
signifies
the rate at which liquidity is
injected.

Bank Rate

This is the rate at which RBI

lends money to other banks
(or financial institutions .

The bank rate signals the

central bank’s long-term
outlook
on interest rates. If the bank
rate moves up, long-term
interest rates also tend to
move up, and vice-versa.

Banks make a profit by

borrowing at a lower rate and
lending the same funds at a
higher rate of interest. If
the
RBI hikes the bank rate (this
is currently 6 per cent), the
interest that a bank pays for
borrowing money (banks borrow
money either from each other
or from the RBI) increases.
It, in turn, hikes its own
lending rates to ensure it
continues to make a profit.
 Call Rate

Call rate is the interest rate

paid by the banks for
lending and borrowing for
daily fund requirement. Si nce
banks need funds on a daily
basis, they lend to and borrow
from other banks according to
their daily or short-term
requirements on a regular
basis.

CRR

Also called the cash reserve

ratio, refers to a portion of
deposits (as cash) which banks
have to keep/maintain with
the RBI. This serves two
purposes. It ensures that a
portion of bank deposits is
totally risk-free and secondly
it enables that RBI control
liquidity in the system, and
thereby, inflation by tying
their hands in lending money

SLR

Besides the CRR, banks are

required to invest a portion
of
their deposits in government
securities as a part of their
statutory liquidity ratio
(SLR) requirements. What SLR
does
is again restrict the bank’s
leverage in pumping more money
into the economy.

Is This Answer 100 Yes 4 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo means purchase of one 0 Ranadheer.v
# 7 loan and sale of another.Itis
from one day to fourteen days.
They involve the sale of
securites against cash with a
future buy back agreement.
under such agreement, the
seller sells specified
 securities
with an agreement to
repurchase the same at a
mutually
decided future date and price.
similarly, the buyer purchase
the securities with an
agreement to resell the same
to the
seller on an agreeed date at
a predetermined price. the
transaction is called "REPO.
The difference between
actually
received and paid is
calculated in percentage it is
called
"REPO RATE"
Repos are part of
open market operations
undertakne to influence short-
term liquidity.
Repo is viewed
from the perspective of the
seller of the securities, and
Reverse Repo when viewed from
the perspective of the buyer
of the securities

Is This Answer 8 Yes 8 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer A Repurchase agreement (also 0 Avinesh
# 8 known as a repo or Sale and
Repurchase Agreement) allows a
borrower to use a financial
security as collateral for a
cash loan at a fixed rate of
interest. In a repo, the
borrower agrees to immediately
sell a security to a lender
and also agrees to buy the
same
security from the lender at a
fixed price at some later date
A Reverse Repo is simply the
same repurchase agreement from
the buyer's viewpoint, not the
seller's. Hence, the seller
executing the transaction
would describe it as a 'repo',
while the buyer in the same
transaction would describe it
 a 'reverse repo'. So 'repo'
and 'reverse repo' are exactly
the same kind of transaction,
just described from opposite
viewpoints.

Is This Answer 11 Yes 4 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo rate means the percentage 0 Swapnil
# 9 at which RBI lends money to
other banks.
And reverse repo rate means
the interest rate which the
other banks get by depositing
their money to RBI.

Is This Answer 11 Yes 9 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo rate is the rate at which 0 Dean
# 10 the banks can borrow money
from a central bank of the
country in order to avoid
scarcity of funds.For eg,
whenever the banks have any
shortage of funds they can
borrow it from Reserve Bank of
India (RBI). Thus Repo rate is
the rate at which our banks
borrow rupees from RBI. A
reduction in the repo rate
will
help banks to get money at a
cheaper rate. When the repo
rate increases borrowing from
RBI becomes more expensive.
It is also a financial &
economic tool in the hands of
government to control the
availability of money supply
in
the market by altering the
repo rate from time to time.

Reverse repo rate is return

banks earn on excess funds
parked with the central bank
against Government securities
 Is This Answer 8 Yes 2 No
Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo rate is the interest rate 0 Swathirupa
# 11 at which the reserve bank of
India lends mney to other
banks.

Reverse repo rate is return

banks earn on excess funds
parked with the central bank
against Government securities.

Is This Answer 7 Yes 5 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer repo rate is a rate which RBI 0 Rajesh
lends to other bank.
# 12

reverse repo rate is rate that

which RBI takes the money
from other bank of excess fund

Is This Answer 12 Yes 2 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo (Repurchase) rate is the 0 Kavita Poddar
# 13 rate at which the RBI lends
shot-term money to the banks.
When the repo rate increases
borrowing from RBI becomes
more expensive. Therefore, we
can say that in case, RBI
wants to make it more
expensive
for the banks to borrow money,
it increases the repo rate;
similarly, if it wants to make
it cheaper for banks to
borrow money, it reduces the
repo rate.

Reverse Repo rate is the rate

at which banks park their
 short-term excess liquidity
with the RBI. The RBI uses
this tool when it feels there
is too much money floating in
the banking system. An
increase in the reverse repo
rate
means that the RBI will borrow
money from the banks at a
higher rate of interest.

Is This Answer 5 Yes 1 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer repo rate means repo rate and 0 Madhvi Vipul O
# 14 reverse means the reverse of
tha same

Is This Answer 4 Yes 7 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer the current repo rate is 4.75% 0 Renu
# 15 and the reverse repo rate is
3.25%

Is This Answer 12 Yes 3 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo Rate is the rate at 0 Neha
# 16 which the RBI buys government
securities from the market to
infuse liquidity in the
system.

Reverse Repo rate is the rate

at which the RBI absorbs
excess bank funds by selling
government securities in the
market.

Is This Answer 2 Yes 2 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Reverse Repo rate is the rate 0 Satyendrasingh@yahoo.co
# 17 at which Reserve Bank of India
[SBS]
(RBI) borrows money from
banks. Banks are always happy
to lend money to RBI since
their money are in safe hands
with a good interest. An
increase in Reverse repo rate
can cause the banks to
transfer more funds to RBI due
to this attractive interest
rates. It can cause the money
to be drawn out of the banking
system.

Is This Answer 11 Yes 0 No

Correct ?

Re: What is meant by Repo Rate and Reverse Repo Rate.

Answer Repo rate is the rate at which
# 18 the banks can borrow money
from a central bank of the
country in order to avoid
scarcity of funds.For eg,
whenever the banks have any
shortage of funds they can
borrow it from Reserve Bank of
India (RBI). Thus Repo rate is
the rate at which our banks
borrow rupees from RBI. A
reduction in the repo rate
will
help banks to get money at a
cheaper rate. When the repo
rate increases borrowing from
RBI becomes more expensive.
It is also a financial &
economic tool in the hands of
government to control the
availability of money supply
in
the market by altering the
repo rate from time to time.

Reverse repo rate is return

banks earn on excess funds
parked with the central bank
against Government securities