The correct answer is: Bank rate.
The bank rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. It is the benchmark interest rate in India and is used by banks to set their own lending rates. The bank rate is set by the RBI’s Monetary Policy Committee (MPC) and is reviewed every six weeks.
The bank rate is an important tool for the RBI to control the money supply in the economy. When the RBI raises the bank rate, it makes it more expensive for banks to borrow money. This discourages lending and helps to slow down the economy. When the RBI lowers the bank rate, it makes it cheaper for banks to borrow money. This encourages lending and helps to stimulate the economy.
The bank rate is also used by the RBI to manage the exchange rate of the Indian rupee. When the RBI wants to strengthen the rupee, it can raise the bank rate. This makes it more expensive for foreign investors to buy rupees, which pushes up the value of the rupee. When the RBI wants to weaken the rupee, it can lower the bank rate. This makes it cheaper for foreign investors to buy rupees, which pushes down the value of the rupee.
The bank rate is a powerful tool that can have a significant impact on the Indian economy. The RBI carefully considers the impact of the bank rate on inflation, economic growth, and the exchange rate before making any changes to it.
The other options are not correct because:
- Rapo rate is not a term used in the Indian financial system.
- Reverse Rapo rate is the interest rate at which commercial banks lend money to the RBI.
- Sweep stack rate, basic rate is the interest rate at which the RBI lends money to banks against government securities.
I hope this helps!