GROUP 4

ECONOMIC INDICES
REPURCHASE AGREEMENT (REPO RATE) & REVERSE REPO RATE

What is Repo rate? ‡ The rate at which the RBI lends money to commercial banks is called repo rate. ‡ The original seller is effectively acting as a borrower. using their security as collateral for a secured cash loan at a fixed rate of interest. .WHAT IS REPO ‡ A repo or Repurchase Agreement is an instrument of money market. ‡ The party who originally buys the securities effectively acts as a lender.

.REVERSE REPO ‡ In a reverse repo Reserve Bank borrows money from banks by lending securities. The interest paid by Reserve Bank in this case is called reverse repo rate.

TYPES OF REPO MATURITY ‡ Overnight: One-day maturity transaction ‡ Term: Specified end date ‡ Open repo: No end date .

FACTORS AFFECTING REPO RATE ‡ ‡ ‡ ‡ ‡ Inflation Liquidity Monetary Policy Growth in economy Uncertainty .

00 25-Jun-2008 8.00 3-Nov-2008 7.50 8-Dec-2008 6.TIME LINES OF REPO RATE ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ 12-Jun-2008 8.75 16-Sept-2010 6.00 20-Oct-2008 8.00 20-Apr-2010 5.00 .75 19-March-2010 5.00 21-April-2009 4.50 5-March-2009 5.50 ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ 5-Jan-2009 5.25 02-July-2010 5.50 27-July-2010 5.50 30-Jul-2008 9.

Property Market. .IMPLICATIONS OF INCREASE OR DECREASE ON REPO RATE ‡ ‡ ‡ ‡ Bank Deposits rate. Bank Loans. Stock Market Investments.

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