answersLogoWhite

0


Best Answer

Repo is like a repurchase agreement.The rate at which RBI sells securities to bank. But, bank rate is the rate by which RBI lends money to commercial banks. Annu Prakash

User Avatar

Wiki User

15y ago
This answer is:
User Avatar

Add your answer:

Earn +20 pts
Q: Why has the Repo rate taken precedence over the bank rate as a short term interest rate?
Write your answer...
Submit
Still have questions?
magnify glass
imp
Related questions

Why has the Repo rate taken precedence over the bank rate as a short term?

Repo rate is basically to fulfill the short term fund requirements of the firms.By increasing repo rate the central bank tries to absorb liquidity from the economy,but it does not directly affect the market interest rate as banks try to bear the burdenof additional money them selves in order not to loose customers as the other banks might be less dependent on repo rate and might not increase the interest rate on lending. But an increase in bank rate makes credit directly dearer for the banks and as it is long term in nature so banks increase their interest rate on lending, which reduces plannned aggregate investment in the economy and thus hampers growth directly.Repo rate increase might also affect investment but the impact is not that severe and direct as bank rate.As the central bank has to maintain a balance between the growth and inflation rate, so it is trying to control inflation by taking other monetary measures that does not affect the growth of the economy directly.


What is the meaning of reverse repo rate?

repo rate - is the interest rate that reserve bank use to charge commercial banks repo rate - is the interest rate that reserve bank uses to charge commercial banks


What is repo rate define in Hindi?

Har bank RBI se short term ke liye loans leta hai. In short term loans ke liye bank to kuch interest rate pay karna padta hai. use repo rate kehte hain


If a truck and a camper are repossed voluntarily is there a penalty?

The "penalty" is a repo on your CR.,higher interest rates on future loans, and a possible judgement/wage garnishment against you. A repo is a repo is a repo in credit files.


Can you be taken to court after your car has been repo?

YES


What are the release dates for Operation Repo - 2007 Taken for a Ride 11-20?

Operation Repo - 2007 Taken for a Ride 11-20 was released on: USA: 29 January 2014


How does the central banks control the interest rate?

Central banks control interest rates by altering the repo rate. Repo rate is the rate at which banks borrow money from the central bank. So if the central bank hikes the repo rate, the banks will automatically hike their lending rates. similarly if the central bank reduces the repo rate, banks will lower their lending rates too.


How does the central banks control the interest rates?

Central banks control interest rates by altering the repo rate. Repo rate is the rate at which banks borrow money from the central bank. So if the central bank hikes the repo rate, the banks will automatically hike their lending rates. similarly if the central bank reduces the repo rate, banks will lower their lending rates too.


Can a dealer repo a car when theres a clear title on the car with no liensI have a clear title in my name?

No, if the car does not have a lien, then the dealer has no legal interest in it.I'm not sure why a dealer would even try to repo something they had no legal interest in.


Impact of recession?

high interest rates such as the repo rates and high inflation rate


The interest rate charged to banks borrowing from the Federal Reserve is known as the?

Repo rate


How does increase in repo rate effects interest rates?

Repo rate is the rate at which banks borrow money from the central bank of that country. So if the central bank (say reserve bank of india) hikes its repo rate, it becomes costly for banks to borrow money from RBI so they in turn hike the loan interest rates at which customers borrow money from them to compensate for the hike in repo rate.