Banking Term of the day

Repo Rate
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▪️Repo rate is a rate at which banks borrow from RBI for short periods up to 7 or 14 days but predominantly overnight.

▪️RBI manages this repo rate which is the cost of credit for the bank. This becomes a floor below which the short-term interest rates don’t go. Higher the repo rate means the cost of short-term money is very high.

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▪Lower the repo rate means the cost of short-term rate is low which means at higher repo rates the economy growth may slowdown whereas at lower repo rate economy growth may get enhanced.

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