Monetary Policy Instruments — Prelims Questions

Which of the following statements regarding the Monetary Policy Committee (MPC) in India is/are correct? 1. It is a six-member body headed by the Union Finance Minister. 2. It determines the benchmark interest rate (Repo Rate) to achieve the inflation target. 3. Its decisions are binding on the Reserve Bank of India. Select the correct answer using the code given below:

With reference to the Indian economy, consider the following statements: 1. An increase in the Repo Rate generally leads to a decrease in the overall money supply. 2. The Statutory Liquidity Ratio (SLR) primarily aims to ensure the solvency and liquidity of commercial banks. 3. The Standing Deposit Facility (SDF) allows banks to park surplus funds with the RBI without collateral. Which of the statements given above are correct?

Consider the following pairs: 1. Marginal Standing Facility (MSF): Emergency overnight borrowing for banks 2. Open Market Operations (OMO): Buying/selling of government securities 3. Market Stabilization Scheme (MSS): Sterilization of excess liquidity from capital inflows Which of the pairs given above is/are correctly matched?

Which of the following is NOT a qualitative instrument of monetary policy used by the RBI?

Consider the following statements regarding the Liquidity Adjustment Facility (LAF): 1. It helps manage short-term liquidity mismatches in the banking system. 2. It consists of only overnight repo and reverse repo operations. 3. The MSF rate typically acts as the floor of the LAF corridor. Which of the statements given above is/are correct?