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Repo rate is the rate at which:

ARBI borrows from banks
BRBI lends to commercial banks against government securities
CGovernment borrows from banks
DBanks lend to each other
Answer & Solution
Correct answer: B. RBI lends to commercial banks against government securities
**Repo (Repurchase) rate:** RBI lends short-term funds to commercial banks against government securities (with agreement to repurchase). Increasing repo rate makes borrowing costlier → reduces money supply → controls inflation. Decreasing repo rate stimulates economy.
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