UPSC Previous Year Question | Prelims GS | 2023

Which one of the following activities of the Reserve Bank of India is considered to be part of 'sterilization'?

  1. Conducting 'Open Market Operations'
  2. Oversight of settlement and payment systems
  3. Debt and cash management for the Central and State Governments
  4. Regulating the functions of Non-banking Financial Institutions

Answer

Correct Answer

Conducting 'Open Market Operations'

Explanation

Sterilization refers to RBI's use of Open Market Operations to offset the monetary impact of, for instance, forex inflows, by buying/selling government securities to manage liquidity.

Topics: economy, monetary policy, open market operations, rbi sterilization