Core Concept Summary
Module 2: RBI & Monetary Policy Tools
The Reserve Bank of India (RBI) controls liquidity and stabilizes price inflation using instruments like Repo Rate, Reverse Repo Rate, CRR, SLR, and Open Market Operations.
Module Evaluation
5-Question Knowledge Check
Score: 0 / 5
Q1. The rate at which the RBI lends short-term funds to commercial banks against G-Secs is the:
Solution: Repo Rate is the primary policy rate for short-term liquidity injection.
Q2. Cash Reserve Ratio (CRR) mandates commercial banks to park deposits with the:
Solution: CRR is held with the RBI in cash as a percentage of NDTL.
Q3. The Monetary Policy Committee (MPC) consists of:
Solution: The MPC has 6 members: 3 from RBI and 3 appointed by the Central Government.
Q4. Which monetary aggregate is officially classified as "Broad Money" in India?
Solution: M3 = M1 + Time Deposits with banks, known as Broad Money.
Q5. Open Market Operations (OMOs) refer to the purchase or sale by the central bank of:
Solution: OMOs involve buying and selling Government Securities to regulate rupee liquidity.