Repo-Rate is the rate at which RBI lends money to commercial Banks for _________.

Short period

The correct answer is Option 2: Short period.

REPO is a type of operation in which when the central bank buys the security. This agreement of purchase also has specification about date and price of resale of this security. This type of agreement is called a repurchase agreement or repo. The interest rate at which the money is lent in this way is called the repo rate. Similarly, instead of outright sale of securities the central bank may sell the securities through an agreement which has a specification about the date and price at which it will be repurchased. This type of agreement is called a reverse repurchase agreement or reverse repo. The rate at which the money is withdrawn in this manner is called the reverse repo rate. The Reserve Bank of India conducts repo and reverse repo operations at various maturities: overnight, 7-day, 14- day, etc. This type of operations have now become the main tool of monetary policy of the Reserve Bank of India.

Repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks for short periods. This is a tool that the RBI uses to control the money supply in the economy. When the RBI increases the repo rate, it becomes more expensive for commercial banks to borrow money, which can lead to a decrease in the money supply. Conversely, when the RBI decreases the repo rate, it becomes cheaper for commercial banks to borrow money, which can lead to an increase in the money supply.