What is the full form of REPO Rate ?

REPO Rate - Repurchase Agreement Rate

Repo rate is the rate at which banks can borrow money from RBI, by offering a security of central Government securities. Whenever banks have any shortage of funds they can borrow from the RBI.

        Reserve bank charges some interest rate on the cash borrowed by banks. This interest rate is called ‘repo rate’. A reduction in the Repurchase Agreement Rate helps banks get money at a cheaper rate and vice versa.

Repurchase Agreement Rate - A repurchase understanding (repo) is a sort of momentary getting where a vendor or financial backer offers protections to another party, normally a bank or other monetary establishment, with a consent to repurchase them sometime in the not too distant future. The repurchase understanding rate is the loan cost charged on the assets acquired through the repo.Repo exchanges are regularly involved by monetary foundations for the purpose of getting momentary supporting, frequently short-term or for a couple of days. The repo rate is the rate at which the organization getting the assets consents to reimburse the loan specialist, and is regularly attached to the short-term rate set by the national bank. Repo rates can vacillate in view of economic situations, interest for transient supporting, and the financial soundness of the gatherings involved.

There are two primary kinds of repos: reciprocal and tri-party. In a two-sided repo, the borrower and moneylender settle on the provisions of the exchange straightforwardly. In a tri-party repo, an outsider specialist goes about as a delegate between the two gatherings, guaranteeing that the exchange is settled appropriately and that the insurance is held securely.The repo rate is regularly set in view of a benchmark loan fee, for example, the government finances rate or the London Interbank Offered Rate (LIBOR). The benchmark rate is much of the time utilized as a kind of perspective point for other transient getting rates in the monetary business sectors. The repo rate is normally set somewhat over the benchmark rate to mirror the gamble engaged with the transaction.Repo rates can differ in light of various elements, including the reliability of the borrower, the nature of the security being utilized, and the predominant economic situations. For instance, during seasons of monetary pressure or vulnerability, repo rates might increase as loan specialists become more gamble disinclined and request higher paces of return. On the other hand, during times of financial solidness and low loan costs, repo rates might be somewhat low.