{"id":7610,"date":"2020-04-22T16:17:38","date_gmt":"2020-04-22T10:47:38","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=7610"},"modified":"2020-04-22T16:17:38","modified_gmt":"2020-04-22T10:47:38","slug":"reverse-repo-rate","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/reverse-repo-rate\/","title":{"rendered":"Reverse repo rate"},"content":{"rendered":"<section class=\"hero-section\" data-type=\"type-1\" data-alignment=\"left\">\n<header class=\"entry-header\"><span style=\"color: #0000ff;\"><strong>Relevance: Prelims: Economy<\/strong><\/span><\/p>\n<p><strong>Why in news?<\/strong><\/p>\n<\/header>\n<\/section>\n<div class=\"entry-content\">\n<p>\u2022 Unlike in the past, when the RBI used its repo rate as the main instrument to tweak the interest rates, presently, it is the reverse repo rate that is effectively setting the benchmark.<\/p>\n<p><b>About:<\/b><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/image.slidesharecdn.com\/reporateandreversereporate-130918025500-phpapp02\/95\/repo-rate-and-reverse-repo-rate-7-638.jpg?cb=1379472943\" alt=\"Repo rate and reverse repo rate\" \/><\/p>\n<p>\u2022 The repo rate is the rate at which the RBI lends money to the banking system (or banks) for short durations. The reverse repo rate is the rate at which banks can park their money with the RBI.<\/p>\n<p>\u2022 Under normal circumstances, that is when the economy is growing, the repo rate is the benchmark interest rate in the economy because it is the lowest rate of interest at which funds can be borrowed and, as such, it forms the floor rate for all other interest rates in the economy.<\/p>\n<p>\u2022 However, over the last couple of years, India\u2019s economic growth has decelerated sharply. Also, banks are not lending to businesses, partly because banks are too risk-averse to lend and partly because the overall demand from the businesses has also come down.<\/p>\n<p>\u2022 Recognising this, the central bank has cut the reverse repo rate more than the repo twice in the spate of the last three weeks.<\/p>\n<p>\u2022 The idea is to make it less attractive for banks to do nothing with their funds because their doing so hurts the economy and starves the businesses that genuinely need funds.<\/p>\n<\/div>\n<p>&nbsp;<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/image.slidesharecdn.com\/reporateandreversereporate-130918025500-phpapp02\/95\/repo-rate-and-reverse-repo-rate-2-638.jpg?cb=1379472943\" alt=\"Repo rate and reverse repo rate\" \/><\/p>\n<p><span style=\"color: #0000ff;\"><strong>For more such notes, Articles, News &amp; Views Join our Telegram Channel.<\/strong><\/span><\/p>\n<p><a title=\"Telegram Link\" href=\"https:\/\/t.me\/triumphias\" target=\"_blank\"><span style=\"color: #ff0000;\"><strong>https:\/\/t.me\/triumphias<\/strong><\/span><\/a><\/p>\n<p><span style=\"color: #0000ff;\"><strong>Click the link below to see the details about the UPSC \u2013Civils courses offered by Triumph IAS.<\/strong> <\/span><span style=\"color: #ff0000;\"><strong><a style=\"color: #ff0000;\" title=\"Courses available\" href=\"https:\/\/triumphias.com\/pages-all-courses.php\">https:\/\/triumphias.com\/pages-all-courses.php<\/a><\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Prelims: Economy Why in news? \u2022 Unlike in the past, when the RBI used its repo rate as the<\/p>\n","protected":false},"author":1,"featured_media":6714,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43,224],"tags":[392],"class_list":["post-7610","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","category-quick-revision-prelims","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/7610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=7610"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/7610\/revisions"}],"predecessor-version":[{"id":7611,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/7610\/revisions\/7611"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/6714"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=7610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=7610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=7610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}