Repo vs bank rate

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Repo vs bank rate

  1. 1. Repo vs Bank ratePMI(purchasing Manager’s Index)
  2. 2. Two parties are constantly involved– the national bank (RBI) and the commercial bankBoth repo rates and bank rates help to raise fundsboth are considered methods to control the currency supply forthe economy and the banking sectorBANK RATE– Discount rate– Involves loans– No collateralsREPO RATE– Repurchase rate– Involves securities– Securities as collaterals
  3. 3. RBIBANKSTOCKS T-BILLBONDSGives money toprovide liquidityGives securities (collaterals)With repurchase agreement
  4. 4. PMI• An indicator of the economic health of the manufacturingand services sector.• Market & HSBC based monthly data• PMI above 50 is always good for the economy.• The PMI index is based on five major indicators:– new orders,– inventory levels,– production,– supplier deliveries and– the employment environment

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