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Bank PO/Clerk Exam Preparation Materials: Bank Rate, Repo Rate, Reverse Repo Rate

Source : SIFY SKILLS
Last Updated: Mon, Apr 21, 2014 07:37 hrs

Candidates aspiring to enter into the banking industry are expected to be well versed with the basic terminology of banking. Here is a video which explains the four main terms in banking in ample detail.


Bank Rate (Discount Rate):

The rate at which banks borrow money from RBI for a long period of time.

It's the rediscounted rate on the discounted government securities at which banks borrow money from RBI for a long time (around 5 years).


Bond:

An agreement, also called as a security. It is of two types:

  • Coupon Bond: Issued only by private firms

  • Zero Coupon Bond: Issued only by the government


Repo Rate:

Stands for repurchase option rate. Repo Rate is the rate at which the RBI lends money to the commercial banks within the country for a short period of time.


Reverse Repo Rate:

Reverse Repo Rate is the rate at which the RBI borrows from commercial banks within the country for a short period of time.


 

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