which of the following are correctly matched Repo rate ndash it is the rate at which the c...........

Current General Knowledge (CLAT) Others

The Reserve Bank of India’s Monetary Policy Committee, in its meeting over the last three days, has decided to keep its short term lending rate or the repo rate unchanged at 4 per cent, in line with market expectations.

The central bank also announced a series of measures to inject liquidity in the government securities market and the financial system. Announcing the monetary policy today, RBI Governor –1--said the central bank will maintain its ‘accommodative stance’ as long as required to sustain growth on a durable basis.

The RBI’s decision comes amid a surge in Covid-19 cases that has prompted many states to impose fresh curfew restrictions this week, triggering concerns over the economic recovery that is underway. The MPC voted unanimously to keep rates steady and retain the accommodative monetary policy stance; --1-- said adding that it would do so while keeping a leash on inflation. The annual Consumer Price Index-based retail inflation rate rose to a three-month high of 5.03 per cent in February. “The MPC judged that monetary policy should remain accommodative till prospects of sustained recovery are well secured.

Retail inflation is projected to stay around 5 per cent next year: 5% in Q4 of FY’21; 5.2% in Q1 and Q2 FY’22; down to 4.4% in Q3 FY’22 and 5.1% in Q4 FY’22.The RBI maintained its GDP growth forecast at 10.5 per cent for 2021-22.

The central bank has slashed the repo rate — benchmark lending rate — by a total of 115 basis points (one basis point is one-hundredth of a percentage point) since March 2020, coming on top of the 135 bps of cumulative cuts since early 2019.

The RBI will ensure orderly conduct of government borrowing programme. In this respect, the central bank announced a secondary market government securities (G-sec) acquisition plan worth Rs 1 lakh crore for April-June. These measures are announced amid a tightening in the G-sec bond market, with yields hardening and expanding debt requirement of the central and state governments.

Amid the government plans to support a new asset reconstruction company being set up by banks, the RBI has decided to set up a committee to review the working of ARCs to ensure how better these entities can support the financial sector.

which of the following are correctly matched?

Repo rate – it is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds.
Reverse repo rate- it is the rate at which the RBI borrows money from commercial banks within the country.
Liquidity Adjustment Facility (LAF)- It 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.

Choose the correct answer by using the codes given below

Only 1 and 2

Only 1 and 3

All of these

None of these

Explanation:

- Statement 1: Repo rate is correctly defined as the rate at which the Reserve Bank of India lends money to commercial banks to meet any shortfall of funds.

- Statement 2: Reverse repo rate is accurately described as the rate at which the Reserve Bank of India borrows money from commercial banks.

- Statement 3: Liquidity Adjustment Facility (LAF) is rightly explained as a monetary policy tool used by the RBI, which allows banks to borrow money through repos or make loans to the RBI through reverse repos.

- Option 1: Only statements 1 and 2 are considered, which are correct.

- Option 2: Only statements 1 and 3 are considered, which are correct.

- Option 3: All statements (1, 2, and 3) are correct as per the descriptions provided.

- Option 4: None of the given descriptions are incorrect.

Correct Answer: Option 3 (All of these)