Question

Interest on WMA is charged at:

• A. Bank rate
• B. Current repo rate
• C. Fixed 10% rate
• D. Prime lending rate

Answer 1

Answer:

B. Current repo rate

RBI charges interest on WMA at the prevailing repo rate, which is the rate at which RBI lends to banks. This ensures that WMA remains a short-term, temporary facility and discourages prolonged reliance by the government.