When the RBI wants to inject liquidity into economy, it may adopt the following:begin{enumerate}item Buy the government securities from the banks.item Enter into reverse repo operationsitem Raise cash Reserve Ratioitem Reduce SLR.end{enumerate}Select the correct answer using the codes given below:

BANKING GENERAL KNOWLEDGE

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

When the RBI wants to inject liquidity into economy, it may adopt the following:

A	1 only
B	1 and 4 only
C	1, 2 and 4 only
D	1, 2, 3 and 4

Explanation:

Detailed explanation-1: -By Buying the government securities from the banks and reducing SLR may inject money into the system.

Detailed explanation-2: -When the RBI wants to inject liquidity into economy, it may adopt the following: (1) Buy the government securities from the banks. (2) Enter into reserve repo operations. (3) Raise cash Reserve Ratio.

Detailed explanation-3: -How does RBI manage liquidity? The Reserve Bank of India (RBI), under its Liquidity Adjustment Facility, infuses liquidity in the banking system via repos and sucks it out using reverse repos. The RBI, after assessing liquidity conditions, uses a 14-day variable rate repo and/or reverse repo operation.

Detailed explanation-4: -When RBI wants to reduce liquidity in the banking system, it increases the CRR as it reduces the money supply in the economy.

Detailed explanation-5: -A LAF is a monetary policy tool used in India by the RBI through which it injects or absorbs liquidity into or from the banking system. It was introduced as a part of the outcome of the Narasimham Committee on Banking Sector Reforms of 1998.

There is 1 question to complete.