Question
Download Solution PDFWhich of these institutions fixes the Repo Rate and the Reverse Repo Rate in India?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is option 4:
- Reserve Bank of India (RBI) is responsible for fixing Repo or Reverse Repo Rate.
- RBI regulates these rates as a part of its monetary policy.
- Monetary policy refers to the steps undertaken by the central bank to control the liquidity and supply of money in the market.
- Repo Rate: It is an Acronym for the Repurchasing Agreement Rate. It is the rate at which RBI lends money to other banks in the country for the short term.
- Reverse Repo Rate: When banks deposit their surplus funds with RBI for a short term, the rate then offered by RBI is called Reverse Repo Rate.
Reserve Bank of India (RBI):
- It was established on April 1, 1935, under the RBI Act 1934, but as a private bank.
- RBI was nationalized in 1949.
- It is the apex banking institute of India.
Last updated on Jul 21, 2025
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