Which of the following is INCORRECT with respect to repo rate?

Correct option is C

The correct answer is (c) It is the rate at which banks place their funds with the RBI and receive collateral.
• The repo rate refers to the rate at which commercial banks borrow funds from the Reserve Bank of India (RBI) by providing securities as collateral, not the rate at which they place their funds with the RBI.
Information Booster:

• Repo Rate: The rate at which the RBI lends money to commercial banks for short-term periods, typically to control inflation and manage liquidity in the economy.

• Current Repo Rate: The current repo rate is 6.50% (since December 6, 2024).

• Reverse Repo Rate: The reverse repo rate is the rate at which the RBI borrows money from commercial banks to manage liquidity. The current reverse repo rate is 3.35% (as of January 13).

• Who Controls It: The Reserve Bank of India (RBI) controls the repo rate.

• Recent RBI Governor (2025): Sanjay Malhotra is the current Governor of the RBI.

• Current CRR (Cash Reserve Ratio): The current CRR is 4% (as of December 6, 2024).

• Current SLR (Statutory Liquidity Ratio): The current SLR is 18% (as of February 8, 2024).