Practicing Success
When commercial banks have surplus deposits they park them with reserve bank of India and earn interests. What is the rate known as? |
Repo rate Reverse repo rate Deposit rate Marginal rate |
Reverse repo rate |
When, commercial banks have surplus funds, they park it with RBI and the rate of return which they get is known as reverse repo rate. Whereas, when commercial banks require funds for a small period of time, they borrow from reserve bank of India against approved security. The rate charged for the same is called as repo rate. |