Glossary
/Reverse Repo Rate
What do banks do with cash they don't want to lend out? They dump it back with the RBI. The interest the central bank pays them for holding this extra money is the reverse repo rate. Think of it as the exact opposite of the repo rate. If the RBI hikes this rate, banks figure it's much safer to earn guaranteed interest from the government than to deal with regular customers. The result? Home and car loans become harder to get because banks are hoarding cash rather than circulating it.