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what is repo rate?
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Answer Posted / rashmi ranjan
It is the rate at which RBI rediscounts the govt
securites.i.e it is the rate at which RBI lends money to
commercial banks. During inflation RBI increases repo rate
so as to make borrowings costlier and as a result the flow
of credit creation in the economy gets effected.This
ultimately tries to suck the excess liquidity in the
market.
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