Practicing Success
Which of the following option denotes the rate at which commercial banks park their excess reserves with RBI? |
Open market rate Repo rate Reverse repo rate MSF rate |
Reverse repo rate |
The correct answer is Option 3: Reverse repo rate The reverse repo rate is the rate at which commercial banks park their excess reserves with the Reserve Bank of India (RBI). It is a tool used by the central bank to manage liquidity in the banking system by offering an interest rate to banks for their excess reserves deposited with the RBI.
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