RBI, on behalf of government, issues MSS bonds to mop up extra liquidity from the market. This is same as Open Market Operations(OMO), but has a significant difference. What is it?
Answer: B
Market Stabilisation Scheme(MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The mobilised cash is held in a separate government account with the Reserve Bank. The instrument thus has features of both, SLR and CRR
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Which among the following defines Marginal Standing Facility Rate?
Answer: B
To meet additional liquidity requirements, banks can borrow overnight funds from the Reserve Bank under the Marginal Standing Facility (MSF) at a higher rate of interest. Banks can borrow against their excess SLR securities and are also permitted to dip down up to two percentage points below the prescribed SLR to avail funds under the MSF
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Which of these is NOT a monetary policy tool?
Answer: C
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RBI will create polymer based currency notes of which denomination?
Answer: B
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The RBI sells government securities to control the _______:
Answer: B
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What happens when CRR is increased?
Answer: D
When CRR is increased , it decreases money supply, Increases interest rates on home loans, car loans etc. and in inter-bank market, Increases demand for money and decreases inflation.
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An increase in Bank Rate generally indicates that the market rate of interest is likely to fall.
Answer: D
Central Bank is following a tight money policy. When RBI increases the bank rate, the cost of borrowing for banks rises and this credit volume gets reduced leading to decline in supply of money. Thus, increase in Bank rate reflects tightening of RBI monetary policy.
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RBI has restricted Indian entities from making investments in non cooperative countries and territories as per _________
Answer: A
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Every financial institution has to maintain a certain quantity of liquid assets with themselves at any point of time of their total time and demand liabilities. These assets have to be kept in non cash form such as G - secs precious metals, approved securities like bonds etc. The ratio of the liquid assets to time and demand liabilities is termed as _____:
Answer: A
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When RBI reduces Statutory Liquidity Ratio by 50 basis points , which of the following is likely to happen?
Answer: C
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