____ and Marginal Standing Facility form part of the Liquidity adjustment facilities of RBI

CRR

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Repo Rate

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Solution

The correct option is B Repo Rate
Liquidity Adjustment Facility (LAF) is a tool used in monetary policy by the RBI, that allows banks to borrow money through repurchase agreements (repos) or for banks to make loans to the RBI through reverse repo agreements.

-Repo rate is the rate at which a country’s central bank (RBI) lends money to commercial banks and Reverse repo rate is the rate at which the RBI borrows money from commercial banks within the country.

-Marginal Standing Facility is a window for scheduled banks to borrow overnight from the RBI in an emergency situation when interbank liquidity dries up completely.

Repo Rate and Marginal Standing Facility form part of the Liquidity adjustment facilities of RBI. (Under interbank lending, banks lend funds to one another for a specified term).

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Similar questions

Consider the following statements about different short–term liquidity management measures taken by RBI:

Codes :

1 and 2 only
1 and 3 only
1 only
All of these

Reserve Bank's Liquidity Adjustment Facility (LAF) refers to:

What is the current Policy Repo Rate under the liquidity adjustment facility (LAF)?

Q22) If reverse Repo is 5% on a particular day, how much will be Repo and MSF(marginal standing facility)?

50. Identify the correct statements.

1. Marginal Standing Facility (MSF) Rate: It is rate at which the scheduled banks can borrow funds overnight from RBI against government securities

2. Statutory Liquidity Ratio (SLR): It is amount that banks have to maintain a stipulated proportion of their net demand and time liabilities (NDTL) in the form of liquid assets like cash, gold and unencumbered securities, treasury bills, dated securities etc.

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