Repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities. It is one of the main tools used by the RBI to keep inflation under control. When banks are short on funds or need to maintain liquidity under volatile market conditions, they can obtain loans from the RBI by selling qualifying securities. The current repo rate in India, as of November 7, 2023, is 6.50%.

The RBI also has a reverse repo rate, which is the rate at which the RBI borrows money from commercial banks. As of April 2021, the reverse repo rate stands at 3.35%. The repo rate and reverse repo rate are used by the RBI to manage inflation. When the market is impacted by inflation, the RBI raises the repo rate. An increased repo rate means that banks borrowing money from the central bank during this period will have to pay more interest. This inhibits banks from borrowing money, reducing the amount of money in the market and helping to negate inflation. In the event of a recession, RBI repo rates are also reduced.