what is the difference between bank rate and repo rate?
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Answer Posted / encyclopedia
Both are basically the same. The Bank rate is the rate at
which commercial banks, which are temporarily short of
cash, can borrow from the Central Bank.The repo rate
enables holders of Securities, principally commercial
banks, to acquire funds from the Central Bank by selling
the securities and at the same time agreeing to repurchase
them at a later date at a predetermined price.
Increases in these rates indicate a desire for a
contraction in credit while decreases reflect a relaxation
of interest rate policy.
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