India, Sept. 30 -- The repo rate is one of the most important terms in banking and finance, often making headlines every time the Reserve Bank of India (RBI) announces its monetary policy. The repo rate is the RBI's most powerful tool to manage inflation, growth, and liquidity. Every change in this rate has a ripple effect across the banking system and directly impacts consumers, savers, and investors. But what exactly does it mean, and why should it matter to you as a borrower, saver, or investor?

The term repo stands for repurchase option. In simple terms, it is the rate at which the RBI lends money to commercial banks when they run short of funds. To borrow this money, banks sell government securities to the RBI with an agreement to r...