Match the following. List-I List-II a. Rate at which RBI gives loans to commercial banks by discounting bills 1. Reverse Repo rate b. Rate at which RBI borrows from commercial banks 2. Repo rate 3. Prime lending rate

The correct answer is: A. a-3, b-1

• Repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks. The RBI uses the repo rate to control the money supply in the economy. When the RBI increases the repo rate, it makes it more expensive for banks to borrow money, which reduces the amount of money in circulation. When the RBI decreases the repo rate, it makes it cheaper for banks to borrow money, which increases the amount of money in circulation.
• Reverse repo rate is the rate at which commercial banks lend money to the RBI. The RBI uses the reverse repo rate to control the money supply in the economy. When the RBI increases the reverse repo rate, it makes it more attractive for banks to lend money to the RBI, which reduces the amount of money in circulation. When the RBI decreases the reverse repo rate, it makes it less attractive for banks to lend money to the RBI, which increases the amount of money in circulation.
• Prime lending rate is the rate of interest at which banks lend money to their most creditworthy customers. The prime lending rate is determined by a number of factors, including the cost of funds for banks, the risk of lending, and the competitive environment.

In the given question, List-I gives the rate at which RBI gives loans to commercial banks by discounting bills, while List-II gives the rate at which RBI borrows from commercial banks. The correct match is:

• a. Rate at which RBI gives loans to commercial banks by discounting bills = Repo rate
• b. Rate at which RBI borrows from commercial banks = Reverse repo rate