In this case, the transaction is a reverse-repurchase agreement because the bank agrees to purchase securities under an agreement to resell.

In this case, the transaction is a reverse-repurchase agreement because the bank agrees to purchase securities under an agreement to resell. The bank is buying (investment of funds) the securities owned by Salami Brothers (liquidity provided; funds gained for period of reverse-repo). Technically it is not a loan, but a purchase (bank) with agreement to resell, but the effect is the same as a loan to a customer. (b) Is the loan collateralised? What is the collateral? Who holds the collateral during the term of the agreement?