What is a ‘Repo Rate’?

Correct option is C

The Repo Rate is the rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against the collateral of government securities. It is a key tool used by the RBI to manage liquidity in the banking system.
Information Booster:
· Repo rate influences the cost of borrowing for commercial banks, which in turn affects the interest rates on loans and deposits for consumers.
· The RBI uses the repo rate to control inflation and stabilize the economy.
· A reverse repo rate is the rate at which the RBI borrows money from commercial banks, as opposed to lending money to them.
Additional Information:
· Repo Rate is an important monetary policy tool for managing inflation and maintaining economic stability.