banking

Bank Rate The rate of interest charged by the Reserve Bank of India (RBI) on financial accommodation extended to banks and FINANCIAL INSTITUTIONS. The support is provided in the form of a bills rediscounting facility and advances or REFINANCE against specified ASSETS (e.g. TREASURY BILLS and DATED SECURITIES) or PROMISSORY NOTES.in simple words,The rate at which a central bank lends money to its domestic banking system is called as BANK RATE

REPO RATE: The central bank sells securities to commercial banks and agrees to repurchase it at a specific date and at a pre-agreed price. Through this operation, commercial banks are effectively borrowers of funds to finance further purchases of securities, and pay an interest to the central bank. This rate of interest is referred to as repo rate. The reverse repo rate is the rate commercial banks earn on funds that they lend to the central bank. Some central banks use repos and reverse repos in government debt as part of their money market operations