BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If the Reserve Bank of India sells securities in the market it will result in____
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An immediate change in the Bank rate
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A fall in the market rate of interest
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An increase in loans to Bank customers
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A reduction in Bank deposits
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Explanation:
Detailed explanation-1: -Under open market operations, the RBI sells the government securities to reduce the amount of money in the economy. No worries! We’ve got your back. Try BYJU’S free classes today!
Detailed explanation-2: -If RBI conducts a sale of securities, it absorbs liquidity in the economy thereby reducing Cash Reserves in commercial banks.
Detailed explanation-3: -Open Market Operations refers to the buying and selling of Government securities in the open market. This purchase and sale are entrusted to the Central bank (RBI) on behalf of the Government. When RBI buys a Government bond in the open market, it pays for it by giving a cheque.
There is 1 question to complete.