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Information about credit control of rapo rate in India?
How does the repo rate affect the credit control in India?
The repo rate directly affects the interest rates that commercial banks charge on loans and advances which includes various types of credit. When the RBI lowers the repo rate, banks pass on this benefit to their customers by reducing the interest rates they charge on loans, making credit cheaper and more accessible. When the RBI raises the repo rate, banks increase their lending rates, making credit more expensive and reducing the demand for credit.