2025-08-14 20:21
IndustryDefining Reverse Repo Rate
The reverse repo rate is the interest at which the banking regulator, the Reserve Bank of India (RBI), procures loans from commercial banks in the country. This tool helps the central bank regulate liquidity within the banking system. As the RBI raises the reverse repo rate, banks are inclined to park more funds with it, reducing the liquidity within the economy. At the same time, a fall in the reverse repo rate discourages banks from depositing more funds with the RBI, offering increased room for loan disbursals to businesses and consumers.
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Defining Reverse Repo Rate
India | 2025-08-14 20:21The reverse repo rate is the interest at which the banking regulator, the Reserve Bank of India (RBI), procures loans from commercial banks in the country. This tool helps the central bank regulate liquidity within the banking system. As the RBI raises the reverse repo rate, banks are inclined to park more funds with it, reducing the liquidity within the economy. At the same time, a fall in the reverse repo rate discourages banks from depositing more funds with the RBI, offering increased room for loan disbursals to businesses and consumers.
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