Question
Download Solution PDFThe rate at which the Reserve Bank of India lends to other commercial banks for short term has been reduced. What is this rate called?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Repo Rate.
Key Points
- Repo Rate:-
- It is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks for short term.
- The reduction in Repo Rate indicates that the RBI is trying to encourage borrowing and spending in the economy.
Additional Information
- Cash Reserve Rate:-
- CRR is the amount of funds that banks have to keep with the RBI as a reserve. It is not related to lending rates.
- Reverse Repo Rate:-
- It is the rate at which the RBI borrows money from commercial banks. It is also not related to lending rates.
- Bank Rate:-
- It is the rate at which the RBI lends money to commercial banks for long term. It is also not related to short-term lending rates.
Last updated on Jun 26, 2025
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