Question : _____________is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks of the country.
Option 1: Reserve Repo Rate
Option 2: Base Rate
Option 3: Marginal Rate
Option 4: Repo Rate
Correct Answer: Repo Rate
Solution : The correct option is the Repo Rate .
The "Repo Rate" is the interest rate at which commercial banks get loans from the Reserve Bank of India (RBI). "Repo" stands for "Repurchase Agreement." Commercial banks can sign a buyback arrangement with the RBI and pledge government securities as security when they need money. The repo rate is the interest rate the RBI charges on this type of short-term borrowing.
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