Economics • Banking & FinanceEasy
What does 'LAF' stand for in the context of RBI monetary operations?
A. Liquidity Adjustment Facility✓ Correct Answer
B. Loan Asset Fund
C. Leverage Asset Framework
D. Limited Asset Facility
💡 Solution & Explanation
LAF stands for Liquidity Adjustment Facility, which serves as the primary monetary policy instrument utilized by the Reserve Bank of India to manage liquidity through repo and reverse repo rates. It helps commercial banks handle short-term cash mismatches efficiently. Central banking instruments are fundamental concepts evaluated in economics and banking examinations.
More Economics Banking & Finance questions
- What does the term 'Basel III Capital Conservation Buffer (CCB)' require banks to maintain?
- What is the primary operational objective of introducing 'Treps (Tri-Party Repo)' in the Indian money market?
- Analyze the liquidity adjustment facility framework of the Reserve Bank of India. What is the operational…
- Which institution acts as the central banking authority in India?
- What is the statutory objective of establishing the Monetary Policy Committee in India under the Reserve Bank…