What is the use of Reverse Repo Rate?

Question of The Day11-06-2021

RBI uses Reverse Repo Rate to:

Answer

Correct Answer : b ) Absorb Liquidity

Explanation :

Reverse Repo Rate is defined as the rate at which the Reserve Bank of India (RBI) borrows money from banks for the short term. It is an important monetary policy tool employed by the RBI to maintain liquidity and check inflation in the economy. The Reverse Repo Rate helps the RBI get money from the banks when it needs it.

Hence, option (b) is correct.

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