Current Repo Rate - General Knowledge Today

Current Repo Rate

On March 20, 2013, RBI has lowered Repo RateRepo rate, or repurchase rate, is the rate at which RBI lends to banks for short periods. This is done by RBI buying government bonds ..... by 25 basisIn a futures market, basis is defined as the cash price (or spot price) of whatever is being traded minus its futures price for the ..... points from 7.75% to 7.50%. The objective is ease pressure on the reviving economyeconomy.


Repo Rate, or repurchase rate, is the rate at which RBI lends to banks for short periods. This is done by RBI buying government bonds from banks with an agreement to sell them back at a fixed rate. If the RBI wants to make it more expensive for banks to borrow money, it increases the repo rate. Similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.
Please note that Bank Rate and Repo Rate seem to be similar terms because in both of them RBI lends to the banks. However, Repo Rate is a short-term measure and it refers to short-term loans and used for controlling the amount of money in the market, Bank Rate is a long-term measure and is governed by the long-term monetary policies of the RBI. In broader term, bank rate is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. RBI uses this tool to control the money supply.
How Repo Rate Works?
When RBI reduces the Repo Rate, the banks can borrow more at a lower cost. This contributes to lowering of the rates. The effects can be seen on the markets in short term.

Last Updated: March 21, 2013

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Comments

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  27. syedrafi says:

    repo rate 8.25
    reverse repo rate 7.25

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  30. preksha says:

    thnx for sharing such useful info but can u tell me under bank rate and repo rate duration of loan provided by RBI to banks
    bank rate: greater than one year or 90 days.
    repo rate:1 to 14 days or till 90 days
    .

  31. preksha says:

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  35. shweta singh says:

    plz send me table of current ratas.like repo rate etc.

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  37. v p singh says:

    now i can differenciate between repo and bate rate .. after a very long time..

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  44. srinivas says:

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  53. dinesh paliwal says:

    now the repo rate is :-7.75
    rev.repo:-6.75
    crr :-4
    bank rate:-8.75
    msf :-8.75
    slr :-23

  54. sandeep says:

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  58. shubham says:

    what is the minimum and maximum time duration of repo rate....

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  63. smart1 says:

    The Reserve Bank of India (RBI) kept interest rates unchanged on Monday after cutting them in each of its previous three policy reviews, warning of upward risks to inflation posed by a falling rupee and increases in food prices.

    The RBI also called for vigilance over global economic uncertainty, citing the risks of a reversal of capital flows from emerging markets. Such outflows would exacerbate the country's high current account deficit.
    Following are highlights from the monetary policy statement:

    Policy Measures
    Keeps repo rate unchanged at 7.25 percent.
    Reverse repo rate stays at 6.25 percent.
    Cash reserve ratio unchanged at 4.00 percent.
    Marginal Standing Facility rate stays at 8.25 percent.
    Bank rate stays at 8.25 percent.

  64. Bhuvana says:

    whether repo rate is at the rate it repurchase the gvt bonds or the rate at which bank has to pay interest to the RBI