Short Article

05-07-2024 | 18:59 PM

Repo Rate

The interest rate at which commercial banks borrow money from the central bank of the country is known as the Repo Rate.

Key Highlights

• The repo rate is decided by the Monetary Policy Committee (MPC) of the RBI.
• Current Repo Rate: 6.5 per cent.

About Monetary Policy Committee

• It is a 6-member committee in which 3 officials are from the Reserve Bank of India and 3 external members are nominated by the central government.
• It is a statutory body constituted under the RBI Act of 1934.
• The MPC is led by the RBI governor.
• The first MPC was constituted in 2016.
• RBI’s MPC Committee is supposed to meet every 2-2 months and is required to meet at least four times a year.
• Quorum: A minimum of four participants are required for the meeting.
• Each member of the committee has one vote, and in the case of an equality of votes, the Governor has a second or casting vote.
• Each Member of the committee writes a statement defining the reasons for voting in favour of, or against the proposed resolution.
• The MPC determines the policy repo rate required to achieve the inflation target.