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Tata Capital > Blog > Wealth Services > What is Repo Rate and Reverse Repo Rate?

Wealth Services

What is Repo Rate and Reverse Repo Rate?

What is Repo Rate and Reverse Repo Rate?

The repo rate and reverse repo rate are key concepts in banking and finance. The repo rate refers to the interest rate at which the central bank, the Reserve Bank of India, lends money to commercial banks, thereby impacting economic activity.

Conversely, the reverse repo rate is the interest rate at which the central bank borrows funds from commercial banks to manage market liquidity. These rates are vital tools the central bank uses to ensure economic stability.

In this article, we will explain the repo and reverse repo rates in detail and highlight the differences between them.

What is the repo rate?

The full form of ‘repo’ is ‘repurchasing option.’ This term refers to the rate at which commercial financial institutions can obtain last-minute funding from the RBI. In return, the RBI receives securities from these commercial institutions, including treasury bills, gold, or bonds.

Once the commercial institution has repaid its loan to the RBI, it has the option to repurchase these securities, hence, the term repurchasing option or repurchasing agreement.

What is the reverse repo rate?

The reverse repo rate is the interest rate at which the commercial banks lend money to the RBI. This monetary policy instrument is used to manage liquidity within the economy. When the RBI raises the reverse repo rate, it can withdraw excess liquidity from the banking system, helping reduce the inflationary pressure.

Historical RBI Repo Rates (2010-2024)

Here are the historical repo rates set by the Reserve Bank of India (RBI) from 2010 to 2024. This data provides an overview of how the RBI’s monetary policy has evolved over these years.

  • 2010:
    • February: 4.75%
    • April: 5.25%
    • June: 5.50%
    • August: 5.75%
    • October: 6.00%
    • December: 6.25%

  • 2011:
    • February: 6.50%
    • April: 6.75%
    • June: 7.50%
    • August: 8.00%
    • October: 8.50%
    • December: 8.50%

  • 2012:
    • February: 8.50%
    • April: 8.00%
    • June: 8.00%
    • August: 8.00%
    • October: 8.00%
    • December: 8.00%

  • 2013:
    • February: 7.75%
    • April: 7.50%
    • June: 7.25%
    • August: 7.25%
    • October: 7.50%
    • December: 7.75%

  • 2014:
    • February: 8.00%
    • April: 8.00%
    • June: 8.00%
    • August: 8.00%
    • October: 8.00%
    • December: 8.00%

  • 2015:
    • February: 7.75%
    • April: 7.50%
    • June: 7.25%
    • August: 7.25%
    • October: 6.75%
    • December: 6.75%

  • 2016:
    • February: 6.75%
    • April: 6.50%
    • June: 6.50%
    • August: 6.50%
    • October: 6.25%
    • December: 6.25%

  • 2017:
    • February: 6.25%
    • April: 6.25%
    • June: 6.00%
    • August: 6.00%
    • October: 6.00%
    • December: 6.00%

  • 2018:
    • February: 6.00%
    • April: 6.00%
    • June: 6.25%
    • August: 6.50%
    • October: 6.50%
    • December: 6.50%

  • 2019:
    • February: 6.25%
    • April: 6.00%
    • June: 5.75%
    • August: 5.40%
    • October: 5.15%
    • December: 5.15%

  • 2020:
    • February: 5.15%
    • April: 4.40%
    • June: 4.00%
    • August: 4.00%
    • October: 4.00%
    • December: 4.00%

  • 2021:
    • February: 4.00%
    • April: 4.00%
    • June: 4.00%
    • August: 4.00%
    • October: 4.00%
    • December: 4.00%

  • 2022:
    • February: 4.25%
    • April: 4.50%
    • June: 4.75%
    • August: 5.00%
    • October: 5.25%
    • December: 5.50%

  • 2023:
    • February: 5.00%
    • April: 5.25%
    • June: 5.50%
    • August: 5.75%
    • October: 6.00%
    • December: 6.25%

  • 2024:
    • February: 6.00%
    • April: 6.25%
    • June: 6.50%

This list captures the key changes in the RBI’s repo rate over the years.

Wrapping up

Whether you’re looking to invest or looking to obtain a loan, keeping yourself informed about the repo and reverse repo rates should be at the top of your to-do list. While borrowing from financial institutions, take your time to research the best options for you.

If you’re looking for guidance on obtaining loans, head over to Tata Capital Moneyfy. We offer you various options tailored to your specific needs, flexible loan tenures, and more, all accessible through an easy digital application process. Visit our website, or download the Tata Capital Moneyfy App to meet your short and long-term financial needs.

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