Repo Rate
The rate at which the RBI lends to commercial banks.
Definition
The Repo Rate is the interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against government securities. It is the RBI's key policy tool to control inflation and liquidity — when the repo rate rises, loans (and EMIs) generally become costlier.
Example
If the RBI cuts the repo rate, banks can borrow cheaper and often pass on lower interest rates on home and car loans, reducing your EMI.
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