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    Question

    Which of the following tool is used in monetary policy

    by the RBI, that allows banks to borrow money through repurchase agreements (repos) or for banks to make loans to the RBI through reverse repo agreements?
    A Repo Rate Correct Answer Incorrect Answer
    B Standing Deposit Facility Correct Answer Incorrect Answer
    C Marginal Standing Facility Correct Answer Incorrect Answer
    D Liquidity Adjustment Facility Correct Answer Incorrect Answer
    E Main Liquidity Management Tool Correct Answer Incorrect Answer

    Solution

    Liquidity Adjustment Facility (LAF) is a tool used in monetary policy by the RBI, that allows banks to borrow money through repurchase agreements (repos) or for banks to make loans to the RBI through reverse repo agreements.

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