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    Question

    What do we call the rate at which the commercial banks

    park their money to Reserve Bank of India?
    A Repo Rate Correct Answer Incorrect Answer
    B Reverse Repo rate Correct Answer Incorrect Answer
    C Marginal Standing Facility Correct Answer Incorrect Answer
    D Bank Rate Correct Answer Incorrect Answer
    E Liquidity Adjustment Facility Correct Answer Incorrect Answer

    Solution

    Repo Rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF). Reverse Repo Rate: The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF.

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