GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Infusion of liquidity, by RBI, is done through ____ from / to banks under a ____ transaction.
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lending, repo
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borrowing, repo
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lending, reverse repo
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borrowing, reverse repo
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Explanation:
Detailed explanation-1: -Significant interest and other cash flows should also be included. The difference between cash inflows and cash outflows in each period, the excess or deficit of funds, becomes a starting-point for a measure of a bank’s future liquidity excess or shortfall at a series of points in time.
Detailed explanation-2: -When the RBI wants to infuse liquidity, it will buy bonds to that extent and when it pays for these bonds, the liquidity gets infused in the system. OMOs work both ways. RBI buys bonds to infuse liquidity and sells bonds to suck out liquidity.
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