Indian History

Repo Rate

The (fixed) interest rate at which the Reserve Bank provides short-term (overnight) liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).
The LAF consists of overnight and term repo auctions. Progressively, the Reserve Bank has increased the proportion of liquidity injected in the LAF through term-repos (of up to 56 days) at variable rates.
The aim of term repo is to help develop inter-bank term money market, which in turn can set market based benchmarks for pricing of loans and deposits, and through that improve transmission of monetary policy.
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