The RBI (India's Central Bank) website says that "predominantly, repos are undertaken on an overnight basis, i.e., for one day period."
So basically, the Central Bank buys securities from other commercial banks in the country and then resell them at a higher price back to these banks the next day (predominantly). My question is how could the commercial banks arrange more cash (i.e. with interest = repo rate) in one day to pay back the Central Bank, if they don't have enough money the previous day to carry out their transactions?
Also, in repo transactions, is the Central Bank buying the securities (with repurchase clause) from commercial banks, or is it keeping the securities just as a collateral? There seems to be an ambiguity in whether a repo transaction is sell-and-buy-back transaction or collateralized borrowing.