Answer-Under the Explanation to Section 17(12AB) of the RBI Act, 1934, an instrument for borrowing funds by...

The Explanation to Section 1712AB defines repo as an instrument for borrowing funds by selling securities of the Central Government, a State Government or specified local authority securities or foreign securities, with an agreement to repurchase the said securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed. By contrast, reverse repo is an instrument for lending funds by purchasing such securities. Borrowing funds by selling securities is therefore a repo.

Question

Under the Explanation to Section 17(12A

B of the RBI Act, 1934, an instrument for borrowing funds by selling securities with an agreement to repurchase them at an agreed future price is known as what?

A Repo

B Reverse repo

C Bank rate

D Standing deposit

E Treasury bill

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