When RBI wants to increase liquidity in the market by buying government securities under repo, do the banks have the option of not sellin…

repo rate n CRR  When RBI wants to increase liquidity in the market by buying government securities under repo, do the banks have the option of not selling it or is it mandatory?

Answer by Jai Parimi:

You said under Repo.

Repo is a repurchase agreement. An agreement is a document agreed upon by both parties. Technically, if banks don't agree they have a choice to opt out.

There is something else called CRR (Cash Reserve Ratio). This ratio maintenance is mandatory.

When RBI wants to increase liquidity in the market by buying government securities under repo, do the banks have the option of not sellin…

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s