Banking Awareness - Basics Of Banking & Banking Terminology
Which banking term refers to the rate at which the central bank uses short-term lending to manage liquidity in the banking system?
Which banking term refers to the rate at which the central bank uses short-term lending to manage liquidity in the banking system?
easy Q1 of 15
Step-by-Step Solution
Step 1: Identify the policy purpose
The question refers to short-term lending used to manage liquidity.Step 2: Match with the correct term
Repo Rate is used by RBI for short-term liquidity adjustment.Final Answer:
Repo Rate → Option AQuick Check:
Repo operations directly influence short-term liquidity ✅
Quick Trick: Short-term RBI lending always points to Repo.
Common Mistakes:
- Confusing Repo Rate with long-term Bank Rate.
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