What is the term for the interest rate at which the RBI lends money to commercial banks in India?

The term for the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks is called the "Repo Rate." The Repo Rate is a critical monetary policy tool used by the RBI to control inflation and regulate the money supply in the economy. When commercial banks need funds, they can borrow from the RBI at this rate by selling their securities to it with an agreement to repurchase them later.

The level of the Repo Rate has a direct impact on the lending rates of banks, affecting the overall financial environment. A higher Repo Rate makes borrowing from the RBI more expensive, which can lead to higher interest rates for consumers and businesses. Conversely, a lower Repo Rate can encourage lending and investment, as it reduces the cost of borrowing. Thus, changes in the Repo Rate are closely monitored by financial markets and can influence economic growth.