Which of the following tools is used by RBI to inject

Solution

Repo Rate is the rate at which RBI lends to banks. Increasing the repo rate reduces liquidity; reducing it increases liquidity. Other Options (Why Not Correct):

• CRR (Cash Reserve Ratio): Reducing CRR injects liquidity, but it is not the primary active tool used for this purpose.
• SLR (Statutory Liquidity Ratio): Primarily used to control inflation and ensure liquidity, but it does not directly inject liquidity.
• Bank Rate: A long-term rate used for more permanent liquidity adjustments.
• Reverse Repo Rate: Used to absorb (not inject) liquidity by encouraging banks to park funds with the RBI.