BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

Please wait while the activity loads.
If this activity does not load, try refreshing your browser. Also, this page requires javascript. Please visit using a browser with javascript enabled.

If loading fails, click here to try again

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

Which among the following helps RBI to manage liquidity conditions in the economy with banks having an avenue to surplus funds or avail funds?

A	SLR
B	Money market Mutual Funds
C	Reverse repos
D	Repos

Explanation:

Detailed explanation-1: -4.41 Repos help to manage liquidity conditions at the short-end of the market spectrum. Repos have often been used to provide banks an avenue to park funds generated by capital inflows to provide a floor to the call money market.

Detailed explanation-2: -Standing Deposit Facility (SDF) Rate: The rate at which the Reserve Bank accepts uncollateralised deposits, on an overnight basis, from all LAF participants. The SDF is also a financial stability tool in addition to its role in liquidity management. The SDF rate is placed at 25 basis points below the policy repo rate.

Detailed explanation-3: -It also uses the Marginal Standing Facility, in which banks can borrow overnight money from RBI by offering government securities as collateral at the MSF rate. The RBI also uses the Standing Deposit Facility to absorb liquidity from banks without collateral. Why there is a shortage of shipping containers?

Detailed explanation-4: -Money market generally includes short-term unsecured (uncollateralised) interbank loans, secured (collateralised) loans (including repurchase agreements), treasury bills (T-bills), commercial papers (CPs) and certificates of deposit (CDs).

There is 1 question to complete.