What will be the impact on the cash reserves of commercial banks if Reserve Bank of India (RBI)…
When the RBI sells government securities under Open Market Operations (OMO), buyers (commercial banks and the public) pay for these securities out of bank reserves, which…
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What will be the impact on the cash reserves of commercial banks if Reserve Bank of India (RBI) conducts a sale of securities ?
Answer and explanation
Correct answer B
When the RBI sells government securities under Open Market Operations (OMO), buyers (commercial banks and the public) pay for these securities out of bank reserves, which absorbs liquidity and decreases the cash reserves of commercial banks.
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RPSC School Lecturer (School Education)