The rate, at which RBI lends short-term money to the banks against securities, is called :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) - Repo Rate
Repo Rate (RR) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities.
- Reverse Repo Rate: This is the rate at which the RBI borrows short-term money from banks.
- Bank Rate: This is a notional rate no longer used by the RBI. It used to be the rate at which the RBI lent money to commercial banks.
- Cash Reserve Ratio (CRR): This is the percentage of deposits that banks are required to maintain with the RBI. It is a monetary policy tool used to control the money supply in the economy, not the rate at which banks borrow money.