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RBI Repo Rate & Reverse Repo Rate Definition

Repo is defined in Section 45U (c) of Reserve Bank of India Act, 1934, which reads as under:-

(c) "repo" means an instrument for borrowing funds by selling securities with an agreement to repurchase the securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed.

Reverse Repo is as defined in Section 45U (d) of Reserve Bank of India Act, 1934, which reads as under:-

(d) "reverse repo" means an instrument for lending funds by purchasing securities with an agreement to resell the securities on a mutually agreed future date at an agreed price which includes interest for the funds lent.


A ‘repo’ transaction by an entity is ‘reverse repo’ transaction for the counterpart entity.


Note: The Reserve Bank of India (RBI) is the apex bank / monetary institution, which controls the banking system in India.

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