Question

Which of the following tools is used by RBI to inject liquidity in the system?

Q: Answer-Which of the following tools is used by RBI to inject liquidity in the system?

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.