MCQ

Liquidity Adjustment Facility MCQ - Practice Questions with Answers

Solve 1 Liquidity Adjustment Facility questions for RAS/RPSC preparation.

Practice questions

Q1Consider the following statements regarding the RBI's Liquidity Adjustment Facility (LAF) corridor: 1. The Standing Deposit Facility (SDF) acts as the floor of the LAF corridor. 2. The Marginal Standing Facility (MSF) acts as the ceiling of the LAF corridor. Which of the statements given above is/are correct?

A 1 only

B 2 only

C Neither 1 nor 2

D Both 1 and 2

Explanation

Both statements are correct. In the RBI's revised liquidity management framework, the Standing Deposit Facility (SDF) is the floor of the LAF corridor and the Marginal Standing Facility (MSF) is the ceiling, with the policy repo rate at the mid-point.

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