Repo and Reverse Repo in India
In India, RBI uses repo and reverse repo techniques to increase or decrease the liquidity in the market. To increase liquidity, RBI buys government securities from banks under REPO; to decrease liquidity, RBI sells the government securities to banks. http://www.svtuition.org/2011/11/repo-and-reverse-repo.html The repo rate in India in 2012 is 8% and the reverse repo rate is 7%. The repo rate is always 1% higher than the reverse repo rate.
Read more about this topic: Repurchase Agreement
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