Mains Answer Writing
Concept Mapping Mentorship- Covering Syllabus Through Themes
- GS & Optional
What are the various tools and mechanisms available to the Reserve Bank of India for managing liquidity in the banking system? Analyze their impact on the stability of the rupee and foreign exchange reserves.
Category: Economy (GS -III),
Test Date: 24 Feb 2025
Approach:
- Introduction: Briefly about importance of liquidity management for a country’s economic stability and role of RBI
- Tools and Mechanisms for Liquidity Management:
- Repo and Reverse Repo Operations
- Open Market Operations (OMO)
- Foreign Exchange Swaps
- Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
- Liquidity Adjustment Facility (LAF)
- Impact on Stability of the Rupee
- Impact on Foreign Exchange Reserves
- Conclude accordingly
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