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NDA 2021 GAT · General Knowledge · Indian Economy · easy

The repo rate is the rate at which

Single correct option

The repo rate is the rate at which
  1. A. commercial banks lend to the public
  2. B. the RBI borrows from commercial banks
  3. C. banks lend to each other
  4. D. the RBI lends short-term funds to commercial banks
Show answer and solution

Answer: (D) the RBI lends short-term funds to commercial banks

Repo (repurchase) rate is the interest charged by the RBI when banks borrow against government securities, and the RBI uses it to control liquidity and inflation. The rate at which the RBI absorbs funds from banks is the reverse repo rate, and interbank lending uses the call money rate. Retail lending rates are set by banks.
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Original question written in the NDA 2021 GAT pattern and checked twice for the correct answer. Not an official question paper. How we write and check questions · Corrections policy · Report a mistake