My Learning Cart
?
Categories
Account

What is the purpose of the Liquidity Adjustment Facility (LAF) provided by the R

₹0.0
Login to Download
  • 📥 Instant PDF Download
  • ♾ Lifetime Access
  • 🛡 Secure & Original Content

What’s inside this PDF?

Question: What is the purpose of the Liquidity Adjustment Facility (LAF) provided by the RBI?

Options:

  1. To provide long-term loans to banks
  2. To manage short-term liquidity mismatches
  3. To control inflation directly
  4. To regulate foreign investments

Correct Answer: To manage short-term liquidity mismatches

Solution: 

The Liquidity Adjustment Facility (LAF) allows banks to borrow money through repurchase agreements to manage short-term liquidity mismatches.

What is the purpose of the Liquidity Adjustment Facility (LAF) provided by the R

Practice Questions

Q1
What is the purpose of the Liquidity Adjustment Facility (LAF) provided by the RBI?
  1. To provide long-term loans to banks
  2. To manage short-term liquidity mismatches
  3. To control inflation directly
  4. To regulate foreign investments

Questions & Step-by-Step Solutions

What is the purpose of the Liquidity Adjustment Facility (LAF) provided by the RBI?
  • Step 1: Understand that banks sometimes need extra money to meet their short-term needs.
  • Step 2: Know that the Reserve Bank of India (RBI) helps banks with this need.
  • Step 3: Learn that the Liquidity Adjustment Facility (LAF) is a tool used by the RBI.
  • Step 4: Realize that through LAF, banks can borrow money from the RBI.
  • Step 5: Understand that banks borrow this money using a process called repurchase agreements.
  • Step 6: Remember that this helps banks manage their cash flow and ensures they have enough money to operate smoothly.
No concepts available.
Soulshift Feedback ×

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?

Not likely Very likely
Home Practice Performance eBooks