Correct answer: (a) Conducting 'Open Market Operations'
Explanation
- A
Conducting 'Open Market Operations'
Open Market Operations. Selling/buying G-secs to mop up or inject the rupees created by forex intervention — sterilisation.
- B
Oversight of settlement and payment systems
Oversight of payment systems. A regulatory function, not sterilisation.
- C
Debt and cash management for the Central and State Governments
Debt and cash management for governments. Fiscal agency, not sterilisation.
- D
Regulating the functions of Non- banking Financial Institutions
Regulating NBFCs. Supervision, not sterilisation.
Summary. Official key is (a). Sterilisation is offsetting the domestic-money effect of forex intervention. RBI does it mainly through open market operations (and similar liquidity tools). Payment-system oversight, government cash management and NBFC regulation are other RBI jobs.
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