What are the short and long term tools of lending to commercial banks by the RBI?
What are the short and long term tools of lending to commercial banks by the RBI?
Solution
✅ Correct Option: 3
The repo rate is the rate at which the RBI lends to commercial banks for short periods against securities, while the bank rate is used for long-term lending without such collateral. Hence short period: repo rate; long period: bank rate.
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