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Difference in Bank Price and you may Repo Rates

Difference in Bank Price and you may Repo Rates

Definition

Repo Rates ‘s the financing rate of which RBI has finance to financial institutions when the latter brings particular securities. Banking institutions sell off this type of bonds with a binding agreement to repurchase him or her. It’s ordered back when banking institutions spend the money for notice at the speed away from ‘REPO’. REPO identifies ‘Repurchase Option’.

Possess

RBI imposes new Repo Price to own banking institutions you to play the role of an anchor having monetary stability. Some elementary features away from repo price try:

  • There was exchanging from bonds. It’s and therefore called ‘Repurchase Agreement’. Thus, financial institutions spend the money for charge for these bonds to acquire him or her straight back
  • Repo speed has actually a primary tenure of a single date
  • For instance the financial price, RBI including presides more than meetings of the Economic Plan Committee to select brand new repo rate. It is the apex system that has the authority to evolve new repo rates to own consequential monetary changes
  • RBI will bring overnight money at repo rate. Читать далее »