Q. Consider the following:
Repo Rate (RR)
Reverse Repo Rate (RRR)
Marginal Standing Facility (MSF)
Arrange the above in a decreasing order of their value?
Answer: 3,1,2
Notes:
- Repo Rate (RR) - The interest rate at which RBI lends to commercial banks
- Reverse Repo Rate (RRR) - The interest rate at which RBI borrows from commercial banks
- Marginal Standing Facility (MSF) - The interest rate at which banks can borrow additional money from RBI against approved securities
The general relationship between these rates is:
MSF > RR > RRR
That is, the Marginal Standing Facility rate is highest, followed by the Repo Rate, and the Reverse Repo rate is the lowest.
Above question is part of 10000+ MCQs for UPSC (Prelims) Paper-1 course in GKToday Android app.
