The 'repo rate' is the rate at which
ARBI sells foreign currency
BRBI borrows from commercial banks
CCommercial banks borrow from the RBI against government securities (repurchase agreement)
DBanks lend to retail consumers
Answer & Solution
Correct answer: C. Commercial banks borrow from the RBI against government securities (repurchase agreement)
Repo rate is the rate at which RBI temporarily lends to banks against eligible securities under a repurchase agreement. Reverse repo is the rate at which RBI borrows from banks.
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