{"id":7022,"date":"2025-06-25T06:27:32","date_gmt":"2025-06-25T06:27:32","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&p=7022"},"modified":"2025-06-25T07:41:10","modified_gmt":"2025-06-25T07:41:10","slug":"repo-rate","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/repo-rate\/","title":{"rendered":"Repo Rate"},"content":{"rendered":"

What is the Repo Rate<\/a>?<\/h3>\n\n\n\n

The Repo Rate<\/strong> (short for “Repurchase Rate”) is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks for short-term needs. Banks borrow funds from the RBI by pledging government securities as collateral.<\/p>\n\n\n\n

Example:<\/strong> If a bank faces a temporary cash shortage, it can borrow ₹1 crore from the RBI at the prevailing repo rate by providing government bonds<\/a> as security.<\/p>\n\n\n\n

What is the Reverse Repo Rate?<\/h3>\n\n\n\n

The Reverse Repo Rate<\/strong> is the interest rate at which the RBI borrows money from commercial banks. When banks have surplus funds, they can deposit this excess money with the RBI and earn interest at the reverse repo rate.<\/p>\n\n\n\n

Example:<\/strong> If a bank has extra funds amounting to ₹50 lakhs, it can park this amount with the RBI and earn interest at the reverse repo rate.<\/p>\n\n\n\n

Key Differences Between Repo Rate and Reverse Repo Rate<\/h3>\n\n\n\n
Feature<\/th>Repo Rate<\/th>Reverse Repo Rate<\/th><\/tr><\/thead>
Definition<\/strong><\/td>Rate at which RBI lends to banks<\/td>Rate at which RBI borrows from banks<\/td><\/tr>
Purpose<\/strong><\/td>To inject liquidity<\/a> into the banking system<\/td>To absorb excess liquidity from the banking system<\/td><\/tr>
Interest Rate Level<\/strong><\/td>Higher<\/td>Lower<\/td><\/tr>
Impact on Economy<\/strong><\/td>Controls inflation<\/a> by regulating money supply<\/td>Manages liquidity by absorbing surplus funds<\/td><\/tr>
Collateral<\/strong><\/td>Requires government securities as collateral<\/td>No collateral required<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
\n\n\n\n

Current Rates (as of June 25, 2025)<\/h3>\n\n\n\n