While selling or purchasing a property, you might have heard about bank rate and repo rate. Therefore it is essential to know the difference between bank rate and repo rate. If I put it in simple words, the rate at which RBI gives a loan to the commercial bank by buying their security is called repo rate. When a commercial bank lends from RBI without depositing any security it is called bank rate.
What is the difference between bank rate and repo rate?When the central bank charges against the loan to a commercial bank it is called the bank rate. When the central bank charges to purchase the securities it is called repo rate.
Collateral is not involved in bank rate but securities, agreements, bonds, and collateral are included in the repo rate.
Bank Rate is always higher than the repo rate.
The customers get affected directly if there is an increase in the bank rate. But an increase in the repo rate does not affect the customer.
Bank rates emphasize long-term financial requirements whereas, repo rates emphasize short-term financial requirements.
The bank rate and the repo rate are the powerful tools of the central bank that is the RBI to control the inflation in the market.
I hope you know the difference between bank rate and repo rate.
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What is the difference between bank rate and repo rate?
Satvika
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3 Year
2021-09-21T18:27:59+00:00 2021-09-21T19:04:54+00:00Comment
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