As the name suggests, Reverse Repo Rate is opposite of Repo Rate. In this arrangement, the apex bank, i.e., the Reserve Bank of India borrows from commercial banks of the country. The rate at which apex banks borrow funds from the commercial banks is known as Reverse Repo Rate.
The current reverse repo rate is set at 3.35%Here are a few things you should know about Reverse Repo Rate:
- In this scenario, the Reserve Bank of India is the borrower while commercial banks are the lenders
- The reverse repo rate reduce overall supply of money in the economy
- It is usually lower than repo rate
- The impact of higher reverse repo rate is that the surplus present with the commercial bank is submitted to the Reserve Bank of India to decrease money supply in the economy
- Just like repo rate, the reverse repo rate is a measure taken by the financial institutions to control inflation in the economy.
I hope you now know what is current reverse repo rate and how it impacts the overall financial stability of a country.
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What is Current Reverse Repo Rate?
Sanjay
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2021-04-22T15:47:49+00:00 2021-04-22T18:44:15+00:00Comment
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