The Reverse Repo Rate is the interest rate at which the central bank, such as the Reserve Bank of India, borrows money from commercial banks. In this process, banks lend their excess funds to the central bank for a short period, usually overnight, in exchange for securities. This helps manage liquidity in the financial system. When the central bank raises the reverse repo rate, it encourages banks to park more funds with it, reducing the money supply in the economy. Conversely, lowering the rate can stimulate lending by making it less attractive for banks to hold their funds with the central bank.