GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What does RBI regulate through Open Market Operation Transactions?
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Inflation
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Liquidity in economy
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Borrowing powers of the banks
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Flow of Foreign Direct Investment
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Explanation:
Detailed explanation-1: -Open market operation transactions are done by RBI to regulate both inflation and money supply.
Detailed explanation-2: -Open Market Operations refer to buying and selling of government securities by the central bank in the open market. The central bank can reduce this gap by buying securities. The money flows out from Central bank into the commercial banks. This raises lending capacity of commercial banks and therefore banks lend more.
Detailed explanation-3: -The Reserve Bank has a legislative mandate to regulate the interest rate and foreign exchange markets which are critical for the resilient functioning of the financial system and the broader economy, and for ensuring financial stability.
There is 1 question to complete.