In the context of economy, sterilization by RBI refers to:
operations by RBI to neutralize effects of excess inflow of foreign investments in the economy.
Correct Answeroperations by RBI to neutralize the effects of high non-performing assets on the economy.
Incorrect Answeroperations by the RBI to neutralize the effects of high fiscal deficit on the economy.
Incorrect AnswerNone of the above
Incorrect AnswerExplanation:
Sterilization refers to the process by which the RBI takes away money from the banking system to neutralise the fresh money that enters the system. By selling the government securities, RBI suck out the liquidity from the market and hence sterilizes the economy against adverse external shocks.
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By: Japjeet Singh