The reverse repo rate is one of the monetary tools of the central bank of India, which is the Reserve Bank of India. This is a policy put in place by the RBI to regulate the inflation and liquidity available in the economy. Repo is a term that means "Repurchase option". It's an agreement where the bank provides eligible sources such as treasury bills to the RBI when they borrow from it. Reverse repo rate is a phenomenon that aims at absorbing all the liquidity in the market, which in turn restricts the borrowing power of the investors.