Q1. The rate at which the Reserve Bank of India lends money to commercial banks is called ____________.
A CRR
B Reverse Repo Rate
C SLR
D Repo Rate Correct
Explanation
Repo rate is the rate at which the Reserve Bank of India lends short-term funds to commercial banks, usually against government securities. CRR is the cash reserve ratio, the portion of deposits banks must keep as cash with the RBI. Reverse repo rate is the rate at which the RBI borrows money from banks. SLR is the statutory liquidity ratio, requiring banks to keep a prescribed share of deposits in liquid assets. Therefore, the lending rate from RBI to commercial banks is the repo rate.