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Chapter 3- Types of Open Market Operations- Outright, Repo, Reverse Repo and also on Bank Rate
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This lesson deals with the details on Outright OMOs, Repo and Reverse Repo and Bank rate.

Arpita Prakash
NCERTs series initiator at Unacademy 'Educator of the Month' for Feb'19 CBSE 0.1% Merit Certificate holder in Mathematics

Unacademy user
  1. RBI buys securities( injecting money into system) without any promise to sell them later . RBI sells securities( withdrawing money from system) without any promise to buy them later e Repo- Repurchase Agreement-Central bank buys security-specification about date and price of resale of security Repo rate- Interest rate at which money is lent in this way . Reverse Repurchase agreement or Reverse Repo- Central bank sell securities through an agreement having specification about date and price at which it will be repurchased Reverse Repo rate- rate at which money is withdrawn in this manner . RBI conducts repo and reverse repo operations at various maturities- overnight, 7 day, 14 day etc . They are main tool of monetary policy of RBI . Bank Rate- rate at which RBI gives loans to commercial banks . By changing it, RBl influences money supply Increase in bank rate-> expensive loans taken by commercial banks-> reduction in reserves held by commercial nk -> decreases money supply . Fall in bank rate -> increase in money supply ba