Reverse Repo Rate
The rate at which the RBI borrows from banks.
Definition
The Reverse Repo Rate is the interest rate at which the RBI borrows money from commercial banks, absorbing excess liquidity from the banking system. It is always lower than the repo rate.
Example
When the RBI wants to reduce surplus cash in the system, a higher reverse repo rate encourages banks to park funds with the RBI instead of lending.
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