With reference to Open Market Operations (OMO), consider the following statements: Monetary policy is adopted by the monetary authority of a country that controls either the interest rate payable on very short-term borrowing or the money supply. UPSC Prelims 2019 – Answer Key, Sources, Sample Solutions and Controversial Questions – Part II . What is it? Credit policy is a part of monetary policy as it deals with how much and at what rate credit is advanced by banks. While some questions on monetary policy of RBI, role of cooperative Banks, etc were influenced by current happenings. Ans: a) Rationing of credit. 2. Some questions like questions on Gold Tranche, FDI, TRIMS, etc were direct concept-based questions. RBI is obliged to transact business of central government and state governments excluding J&K. 2012 UPSC Prelims Questions and Solutions . 9) RBI, on behalf of government, issues MSS bonds to mop up extra liquidity from the market. This year, around 14 questions were asked directly from economics and Indian Economy. Scheduled Commercial Banks may cut their lending rates. Its members are appointed by the President on the recommendations of the Central Government. i) These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances. Sale/purchase of government bonds, as a means to control the money supply in the market, is termed as: Open market operations are defined as the sale and purchase of government securities to control the money supply. The Reserve Bank of India (RBI) uses monetary policy to control inflation, interest rates, supply of money and credit availability. Which of the statements given above is/are correct? In reverse repo, RBI is the lender whereas Banks and Financial Institutions are borrowers. Select the correct answer using the code given below: Ans: a)1 only. 1. The Reserve Bank of India has announced first bi-monthly Monetary Policy Statement for the financial year 2019-20.; LAF Adjustment. The amount a bank needs to maintain in form of cash, gold and other securities before giving credit is. Supply and demand of agricultural products. Answer Explanation: IN Repo rate transaction the RBI acts as a lender as it infuses more money in the system. Public debt Explanation: Following an expansionary monetary policy will lead to the money supply in an economy. Select the correct answer using the code given below: All of the above are used to maintain money supply in the economy. It is a 6 member body.3 members are nominated by the central government and 3 are from the RBI. 2. These questions cover the topics like CRR, SLR, Repo Rate, MSF, LAF etc. Marginal standing facility (MSF) rate and the bank rate reduced to 6%. RBI provides advice in all monetary matters including agriculture and industrial finance. Statutory Liquidity Rate (SLR) is an instrument of the (a) trade policy (b) fiscal policy (c) monetary policy (d) budget Ans. ... UPSC IAS Prelims 2020: Questions Based on Economy from 2018 Paper. But, in FY20, it had an extra meeting in view of the pandemic and the urgent need to assess the … People had engaged in so much PHD over Project Shashkt’s Asset reconstruction companies financing mechanism but look how simple question UPSC … It may drastically reduce the liquidity to the banking system. The Reserve Bank of India (RBI) acts as a bankers’ bank. 7) What will be the impact on the Cash Reserves of commercial banks if RBI conduct a sale of securities? Its objective is to regulate the money supply in the economy. Download MPC notes PDF here. Which of the statements given above is/are not correct? The mobilised cash is held in a separate government account with the Reserve Bank. It is used for overnight lending by the RBI, Consider the following statements and identify the right ones Consider the following statements about Monetary Policy Committee (MPC):  (CSE, 2013), Ans: d) Both statements are correct. 3. RBI monetary policy best online course for upsc #GS3 #ECONOMY The RBI has projected CPI inflation at 6.8 per cent for the third quarter of 2020-21, 5.8 per cent for Q4of 2020-21 and 5.2 per cent to 4.6 per cent in the first half of 2021-22, with risks broadly balanced. Context: The rate-setting Monetary Policy Committee (MPC) will be meeting five times in FY21, against seven in FY20. Usually, the MPC meets six times a year. RBI performs central banking functions as well as development and promotional functions. Need for … Which of the above is/are component(s) of Monetary Policy? Foreign Institutional Investors may bring more capital in to our country. 1. This is same as Open Market Operations(OMO), but has a significant difference. Decreasing CRR will increase money supply and push the economy towards inflationary tendency.No interest is paid on CRR. uFaber , Download Monetary Policy PDF for IAS Exam. 2. The RBI advises the commercial banks on monetary matters. Its core mandate is to fix the benchmark policy interest rate to contain inflation within the target level. 4. In this video Guarav Shukla will discuss Monetary Policy (MSF, Bank Rate, PSL) and Previous Year Questions. Consider the following statements regarding the Marginal Standing Facility (MSF) of RBI:  As per the RBI, the MCLR will bring in the following benefits: 2. 2. Central Bank fixes credit amount to be granted. It refers to the sale and purchase of government securities and treasury bills by RBI. Ans: d) Decrease Ans: d) Answer Explanation: Central Bank is following a tight money policy. 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