WBCS.LIVE practice question

In banking terminology, what is the 'Repo Rate'?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. The rate banks charge corporate clients
  2. The rate the RBI charges commercial banks for short-term loans
  3. The interest given on savings accounts
  4. The rate at which the RBI borrows from banks

Correct answer and explanation

Correct answer: The rate the RBI charges commercial banks for short-term loans

Explanation: āœ… Correct Answer: B) The rate the RBI charges commercial banks for short-term loans šŸ“š Explanation: Repo (Repurchase) Rate is the primary policy rate at which the Reserve Bank of India lends short-term money to commercial banks against government securities. Increasing the repo rate makes borrowing expensive, which helps curb inflation.