BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

There are several direct and indirect instruments that are used for implementing monetary policy. Which among the following is not them?

A	Market Stabilisation Scheme
B	Tax Deducted at Source
C	Cash Reserve Ratio
D	Marginal Standing Facility

Explanation:

Detailed explanation-1: -The most common direct instruments are interest rate controls, credit ceilings, and di-rected lending (lending at the behest of the authorities, rather than for commercial rea-sons). The three main types of indirect instru-ment are open market operations, reserve re-quirements, and central bank lending facilities.

Detailed explanation-2: -The Liquidity Adjustment Facility (LAF) is an indirect instrument for monetary control. It controls the flow of money through repo rates and reverse repo rates.

Detailed explanation-3: -Out of the given options, deficit financing is not a monetary tool.

Detailed explanation-4: -The 6 tools of monetary policy are reverse Repo Rate, Reverse Repo Rate, Open Market Operations, Bank Rate policy (discount rate), cash reserve ratio (CRR), Statutory Liquidity Ratio (SLR).

There is 1 question to complete.