What is the difference between Repo Rate and Reverse Repo Rate? How these rates are calculated by RBI?

POSTED BY shivam1990 ON June 22, 2013 12:47 pm COMMENTS (9)

9 replies on this article “What is the difference between Repo Rate and Reverse Repo Rate? How these rates are calculated by RBI?”

  1. shivam1990 says:

    Thank You Ashal and Jinesh. That was really helpful.

  2. jinesh shah says:

    Dear Shivam

    to add on to Ashal’s reply

    Repo and Reverse repo is liquidity adjustment tools with RBI in which RBI lends money to banks @ REPO(repurchase option) and reverse repo is the (banks park their idle money with RBI and manage day to day liquidity )

    there are other instruments also like CBLO, call money,

  3. Dear Shivam, here are the answers for your queries.

    Repo Rate – The rate at which RBI lends to banks.

    Reverse Repo – The rate at which banks park their money with RBI.

    Cash Reserve Ratio – it’s the cash amount to be kept with RBI from the banks & it does not earn any interest to the bank.

    Thanks

    Ashal

  4. bharat shah says:

    i do not know exactly , so i have not named what for what.

    1. bharat shah says:

      sorry for my answer above which is connection with repo and reverse repo rate. but cash reserve ratio, as i understand , is different.it is the ratio of cash reserve to be kept with RBI to bank’s deposits , and it is different from repo and reverse repo rate. cash reserve ratio is also changed by RBI time to time in connection with the country’s economy . E.&E.O.

  5. shivam1990 says:

    Thank You for your comment Bharat Shah but i have doubt.
    I guess The rate at which different banks give money to RBI is cash reserve ratio . Am i Right or wrong?

  6. bharat shah says:

    as i understand , one is interest rate at which banks at which give money to RBI , and other is at which RBI lends money to banks. as such there is no calculation formula for arriving these rates. RBI is declaring time to time these rates depending upon its view on the country’s economy . E.O. &E.

  7. shivam1990 says:

    Can some give me a genuine answer. Please

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