The document compares repo rates and bank rates, which are both methods used by the national bank and commercial banks to control currency supply and raise funds. Bank rates involve loans without collateral, while repo rates involve lending securities with other securities used as collateral. The document also discusses purchasing manager's index (PMI), which is an indicator of economic health for manufacturing and services, with a reading above 50 always considered good for the economy based on factors like new orders, inventory levels, production, supplier deliveries, and employment.

1. Repo vs Bank rate
PMI(purchasing Manager’s Index)

2. Two parties are constantly involved
– the national bank (RBI) and the commercial bank
Both repo rates and bank rates help to raise funds
both are considered methods to control the currency supply for
the economy and the banking sector
BANK RATE
– Discount rate
– Involves loans
– No collaterals
REPO RATE
– Repurchase rate
– Involves securities
– Securities as collaterals

3. RBI
BANK
STOCKS T-BILLBONDS
Gives money to
provide liquidity
Gives securities (collaterals)
With repurchase agreement

4. PMI
• An indicator of the economic health of the manufacturing
and 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