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      Question

      Which of the following best describes the meaning of reverse repo rate?

      A The rate that the banks earn on keeping excess money with RBI Correct Answer Incorrect Answer
      B The rate that RBI charges on lending money to the banks Correct Answer Incorrect Answer
      C The rate that the banks have to pay for availing excess loans from RBI beyond LAF window Correct Answer Incorrect Answer
      D The rate that the RBI pays to the banks on cash reserve maintained by banks under CRR Correct Answer Incorrect Answer
      E The rate at which banks have to invest in SLR securities Correct Answer Incorrect Answer

      Solution

      Reverse Repo rate is the rate at which the RBI borrows funds from the commercial banks in the country. In other words, it is the rate at which commercial banks in India park their excess money with RBI usually for a short-term.

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