The Economic Times  Mar 5  Comment 
A day after RBI cut the repo rate, the government today said banks will "slowly" but surely will reduce lending rates for borrowers.
The Hindu Business Line  Mar 5  Comment 
The Confederation of Real Estate Developers’ Associations of India (CREDAI) has welcomed the RBI move to reduce the repo rates by 25 bps, the second rate cut within a span of 50 days. The...
The Hindu Business Line  Mar 4  Comment 
Infrastructure players hailed the reduction in repo rate and said the stage appears set for a lower interest rate regime. Praveen Sood, Group CFO, Hindustan Construction Company, said a d...
The Hindu Business Line  Mar 4  Comment 
With two repo rate cuts by the RBI in as many months, banks are likely to report handsome treasury gains in the January-March quarter. This is buttressed by the fact that since January 1,...
Mondo Visione  Mar 4  Comment 
In February 2015, the average daily volume of repo transactions with the central counterparty (CCP) was RUB 168.7 bln (up 58% month-on-month and 148% year-on-year), a record since the launch of the instrument in early 2013.   The market for...
The Hindu Business Line  Mar 4  Comment 
The Finance Ministry has welcomed the RBI's move to reduce repo rate by 25 points, stating that such a move would provide a near term boost to economy. Future rate cuts would depend on f...
The Hindu Business Line  Mar 4  Comment 
Welcoming the 25 basis points cut in repo rate by Reserve Bank of India, State Bank of India Chairman Arundhati Bhattacharya said her bank will take an appropriate call on a cut in base rate by lo...
The Hindu Business Line  Mar 4  Comment 
The Hindu Business Line  Mar 4  Comment 
A timely move! Rajan cites low capacity utilisation, still-weak indicators of production and credit off-take for cutting repo rate by 25 bps— l...
Mondo Visione  Feb 26  Comment 
To promote the development of the bond market and increase the liquidity of various bonds and asset backed securities (ABS), the Shanghai Stock Exchange (SSE) officially releases the “SSE Provisional Measures on Trading of Collateralized Agreed...
The Economic Times  Feb 25  Comment 
RBI will conduct an overnight variable rate repo auction for 150 billion rupees ($2.42 billion) on Thursday, it said in a release on Wednesday.


Repurchase agreements, or repos, are transactions in which a borrower "sells" securities to a lender and agrees to purchase it back for at a specified price on a later date. Most repos are overnight transactions between financial institutions and are primarily used in money markets.

In effect, a repo is a secured loan since the lender gets a collateral for the cash being lent out -- the only difference is that the ownership of the collateral is transferred in the case of repos, whereas under a loan the borrower retains ownership of the collateral. The difference between the selling price and the repurchase price is the effective interest in these transaction.

Rates on repo are different from LIBOR rates, since repos are considered a secured loan whereas the LIBOR is used for unsecured interbank lending.

The US repo market is estimated to be around $4.5 trillion in 2008.[1]

Uses of Repo

Securities dealers are primary users of overnight repos. In order to meet liquidity requirements, they enter into these agreements with short-term investors such as money market funds or other investors who need certain securities for a short-term. Repos are used to finance long positions, borrow money to fund speculative investments, and cover short positions in securities. The Federal Reserve also uses repos for open-market operations where they add or decrease reserves to the banking system by trading in US Treasury securities.

Although repo transactions are backed by a collateral, i.e. the lender can sell the securities to redeem the cash, counter-party risks exists. Specifically, the other party may go bankrupt and not repurchase the securities.


  1. WSJ Online, retrieved October 31, 2008

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