The correct answer is RBI lends money to commercial banks.Repo Rate is the rate at which RBI lends money to commercial banks.Important PointsRepo rate is the rate at which the Reserve Bank of India lends money to commercial banks or financial institutions in India against government securities.Repo means Repurchase Agreement or Repurchase Option.Repo rate is classified under liquid adjustment facility which is a quantitative tool of monetary policy.Effect of Repo Rate on Economy:It helps in controlling inflation (one of the main instruments of RBI).Increase liquidity in the market.This is higher than the reverse repo rate (the rate at which RBI borrows money from banks).The current repo rate for the year 2021 is 4%.