The Hindu Business Line  Oct 7  Comment 
FMCG firm Bajaj Corp today reported 24.95 per cent increase in standalone net profit at Rs 46.77 crore for the second quarter ended September 2015, helped by lower expenses.The company repo...
The Hindu Business Line  Oct 6  Comment 
Banks are using the Reserve Bank policy cycle to their advantage and have been reluctant to pass on the entire benefit of the repo rate cut, leading to a complete “aberration” in monetary transmis...
The Times of India  Sep 30  Comment 
The RBI governor cut the repo rates -- the rate at which the RBI lends to banks -- by 50 basis points (bps), to 6.75%.
The Hindu Business Line  Sep 30  Comment 
The RBI's announcement of a 50 basis point reduction in repo rate not just came as a surprise but a welcome move as well, says industry sources. Hailing the move, Nandakumar, President, I...
The Times of India  Sep 29  Comment 
The Reserve Bank of India governor is at pains to explain that the 50 basis points cut in repo rate is not a gift that he is doling out but only a response to the changing macroeconomic environment.
The Hindu Business Line  Sep 29  Comment 
The big repo rate cut is welcome. But there’s little light on the action in the forex market
The Economic Times  Sep 29  Comment 
The 50 basis points cut takes RBI's repo rate to a four-year low. At 6.75 per cent, the repo rate is now at its lowest since May 2011.
The Hindu Business Line  Sep 29  Comment 
FY16 real GDP growth estimate cut to 7.4%; today’s rate cut based on progress on the ground, it’s not any Diwali bonus, says Rajan
The Economic Times  Sep 28  Comment 
Analysts expect the rupee to remain under pressure and test 66.50 against $ in the near term, which could pose a challenge to RBI.
The Economic Times  Sep 28  Comment 
A Reuters poll showed 45 of 51 economists expect the RBI to cut the repo rate by 25 basis points to 7.00 per cent, its lowest since May 2011.


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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