A financing arrangement used primarily in the government securities markets whereby a dealer or other holder of government securities sells the securities to a lender and agrees to repurchase them at an agreed future date at an agreed price which will provide the lender with an extremely low risk return.
Such a transaction is called a repo when viewed from the perspective of the supplier of the securities (the party acquiring funds) and a reverse repo or matched sale-purchase agreement when described from the point of view of the supplier of funds.
Definition of Repo and Reverse Repo posted by: Girish Ch. Sarma on:Jan 2, 09 4:42 am
I like to few words for the Repo & Reverse Repo.
Repo means sucking liquidity as RBI sells Government Security to banks.
On the otherhand, Reverse Repo means injecting liquidity into the market as RBI repurchase the Goverment security from banks as these Government securities were sold by RBI with the agreement of repurchase.
What is Repo ? posted by: Sudharshan on:Mar 25, 09 3:28 am
A Repo is a repurchase agreement or a ready forward sale. Under this transaction a holder of securities (Govt Bonds) sells them to an investor with an agreement to repurchase them at a fixed price on a fixed date.
