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translateGLOSSARY · BANKING

What is Repo Rate?

The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks against government securities.

PrepClever Glossary · Banking

updateUpdated July 2026

The repo (repurchase) rate is the RBI's primary monetary-policy tool. Raising it makes borrowing costlier and cools inflation; cutting it makes credit cheaper and supports growth. Because most bank loans are now linked to the repo rate, changes pass through quickly to EMIs and deposit rates.

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Example

If the RBI raises the repo rate from 6.25% to 6.50%, banks' cost of funds rises and floating-rate loan EMIs typically increase.

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FAQs about Repo Rate

What happens when the repo rate rises?add

Borrowing becomes more expensive for banks, which pass on higher rates to loans, cooling demand and helping control inflation — while deposit rates also tend to rise.

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What is Repo Rate?

Related Terms

Reverse Repo Rate

Repo-Linked Lending Rate (RLLR)

Cash Reserve Ratio (CRR)

FAQs about Repo Rate

Where to go from here

Master every term that matters

What is Repo Rate?

Related Terms

Reverse Repo Rate

Repo-Linked Lending Rate (RLLR)

Cash Reserve Ratio (CRR)

FAQs about Repo Rate

Where to go from here

Master every term that matters