Hello sir.
I’ve some doubt in the question no. 5.
How can the increase in the ‘Reverse Repo Rate’ can cause an increase in the interest rates of banks, because a ‘Reverse repo Rate’ is the rate at which the central bank borrows short term loans from banks.So if this rate is increased , then the money with the commercial banks should increase, same way their interest rates should decrase.
Please help me out of this confusion. Many thanks.
Himanshu R.
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November 20, 2011 at 10:13 pmHello sir.
I’ve some doubt in the question no. 5.
How can the increase in the ‘Reverse Repo Rate’ can cause an increase in the interest rates of banks, because a ‘Reverse repo Rate’ is the rate at which the central bank borrows short term loans from banks.So if this rate is increased , then the money with the commercial banks should increase, same way their interest rates should decrase.
Please help me out of this confusion. Many thanks.
Himanshu R.