Repo Rate, Reverse repo rate, Cash Reserve Ratio (CRR) Rate

The interest rate that the RBI charges when commercial banks borrow money from it is called the repo rate.

• when the RBI wants to encourage economic activity in the economy, it reduces the repo rates. This indicates to people spend money.

Reverse repo rate

• The interest rate that the RBI pays commercial banks when they park their excess cash with the central bank.

 The repo rate is higher than the reverse repo rate.

Cash Reserve Ratio (CRR) Rate

• The Cash reserve ratio is a certain percentage of cash that all banks have to keep with the RBI as a deposit.