A
Neither 1 nor 2
B
1 only
C
2 only
D
Both 1 and 2
Correct answer: (c) 2 only
Explanation
Statement 1 is incorrect because VRRR (Variable Rate Reverse Repo) is used to absorb excess liquidity from the system, whereas Variable Rate Repo (VRR) is used to inject liquidity. Statement 2 is correct as LAF operations directly influence the Weighted Average Call Rate, which serves as the operating target of monetary policy.
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
-
2024 · Q42 · General Studies · 2 marks
Consider the following statements: 1. In India, Non- Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India. 2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs). 3. In India, Stock Exchanges can offer separate trading platforms for debts. Which of the statements given above is/are correct? -
2022 · Q10 · General Studies · 2 marks
With reference to the Indian economy, consider the following statements: 1. A share of the household financial savings goes towards government borrowings. 2. Dated securities issued at market-related rates in auctions form a large component of internal debt. Which of the above statements is/are correct? -
2021 · Q15 · General Studies · 2 marks
In India, the central bank's function as the 'lender of last resort' usually refers to which of the following? 1. Lending to trade and industry bodies when they fail to borrow from other sources 2. Providing liquidity to the banks having a temporary crisis 3. Lending to governments to finance budgetary deficits Select the correct answer using the code given below -
2020 · Q57 · General Studies · 2 marks
If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do? 1. Cut and optimise the Statutory Liquidity Ratio 2. Increase the Marginal Standing Facility Rate 3. Cut the Bank Rate and Repo Rate Select the correct answer using the code given below: -
2015 · Q22 · General Studies · 2 marks
When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?