The repo rate is the rate at which commercial banks borrow money from the Reserve Bank of India (RBI) for a short period, usually by selling securities with an agreement to repurchase them later. An increase in the repo rate increases the cost of borrowing for commercial banks. This discourages banks from borrowing more from the RBI, leading to a potential increase in lending rates by commercial banks, thereby making credit more expensive for businesses and individuals.
In case RBI wants to make it more expensive for the banks to borrow money it ________
Asked in westbengal/WBCS Main 2019 Paper 5 2019 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
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