BANKING AFFAIRS

Detailed explanation-1: -How to invest in GSec. Retail investors have multiple channels to invest in treasury bills (T-Bills) and Government of India (GoI) dated bonds in the primary market. Retail investors can place their orders through any one of the following options available under the non-competitive bidding facility offered by NSE.

Detailed explanation-2: -Statutory Liquidity Ratio popularly called SLR is the minimum percentage of deposits that the commercial bank maintains through gold, cash and other securities.

Detailed explanation-3: -The Central Bank buys government securities with an aim to increase the money supply. Purchase of securities by the Central Bank leaves more money with the people. It also increases liquidity of the commercial banks to create more credit (in terms of demand deposits).

Detailed explanation-4: -Impact on Money Supply: When RBI buys a Government bond in the open market, it pays for it by giving a cheque. This cheque increases the total amount of reserves in the economy and thus increases the money supply.