Question

Repo rate and bank rate are tools used by RBI under:

• A. Issue of currency
• B. Banker to Government
• C. Credit control
• D. Custodian of foreign exchange

Answer 1

Answer:

C. Credit control

These are monetary policy tools used to control money supply and liquidity in the economy. Repo rate: The rate at which commercial banks borrow money from RBI against securities. Bank rate: The rate at which RBI lends to commercial banks for long-term purposes. By adjusting these rates, RBI influences borrowing, lending, and inflation.