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Question
What is the full form of LAF, as used in banking world very frequently?
What is the full form of LAF, as used in banking world very frequently?
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Solution
The correct option is C Liquidity Adjustment Facility
Liquidity Adjustment Facility (LAF):
In the early 2000s, the Reserve Bank instituted Liquidity Adjustment Facility (LAF) to manage day-to-day liquidity in the banking system. These facilities enable injection or absorption of liquidity that is consistent with the prevailing monetary policy stance.
The Repo rate (at which liquidity is injected) and reverse Repo rate (at which liquidity is absorbed) under the LAF have emerged as the main instruments for the Reserve Bank's interest rate signalling in the Indian economy.
Liquidity Adjustment Facility (LAF):
In the early 2000s, the Reserve Bank instituted Liquidity Adjustment Facility (LAF) to manage day-to-day liquidity in the banking system. These facilities enable injection or absorption of liquidity that is consistent with the prevailing monetary policy stance.
The Repo rate (at which liquidity is injected) and reverse Repo rate (at which liquidity is absorbed) under the LAF have emerged as the main instruments for the Reserve Bank's interest rate signalling in the Indian economy.
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