Hello Friemds
Bank Rate:
It is rate at which RBI allows finance to commercial banks. The different types of refinance facilities given by RBI to banks are linked to the Bank Rate. It is a tool used by the RBI for short-term purposes. Any changes in this rate are followed by revision in deposit rates as well as Prime Lending Rate.
Repo Rate
This is one of the credit management tools used by the Reserve Bank to regulate liquidity in countery (customer spending). The bank borrows money from the Reserve Bank to cover its shortfall. The Reserve Bank only makes a certain amount of money available and this determines the repo rate. If the bank requires more money than what is available, this will increase the repo rate - and vice versa
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