State the effect of a fall in rate of repo rate on creation of credit.
Dear Student
Repo rate is the rate at which RBI ( central bank) gave short term loans to commercial bank.
So a fall in repo rate can decrease the reserve amount that commercial bank needs to keep with central bank and borrowings from central bank became less costly that will ultimately increase the credit creation in the economy.
Regards
Repo rate is the rate at which RBI ( central bank) gave short term loans to commercial bank.
So a fall in repo rate can decrease the reserve amount that commercial bank needs to keep with central bank and borrowings from central bank became less costly that will ultimately increase the credit creation in the economy.
Regards