UPSC Prelims Practice Questions — RBI buys ₹50,000 cr. G-Secs for liquidity, tranche 2 on Friday

Q1. Which one of the following is the principal quantitative instrument used by the Reserve Bank of India for managing durable liquidity in the banking system?

  • A. Variable Rate Repo (VRR) Auction
  • B. Marginal Standing Facility (MSF)
  • C. Outright Open Market Operations (OMO)
  • D. Standing Deposit Facility (SDF)

Q2. Within the Reserve Bank of India, which department is responsible for operationalising Open Market Operations such as the March 2026 G-Sec purchase auctions?

  • A. Department of Currency Management
  • B. Financial Markets Operations Department
  • C. Department of Government and Bank Accounts
  • D. Department of Economic and Policy Research

Q3. Under which one of the following statutory provisions does the Reserve Bank of India derive its power to purchase and sell Government Securities in the open market?

  • A. Section 42(1) of the Reserve Bank of India Act, 1934
  • B. Section 21 of the Banking Regulation Act, 1949
  • C. Section 17(8) of the Reserve Bank of India Act, 1934
  • D. Section 24 of the Banking Regulation Act, 1949

Q4. With reference to the Reserve Bank of India's March 2026 OMO purchase as compared with the December 2025–January 2026 OMO round, consider the following statements: 1. The March 2026 round aggregates ₹1,00,000 crore in two tranches, whereas the December 2025–January 2026 round aggregated ₹2,00,000 crore in four tranches. 2. Unlike OMO sales, outright OMO purchases always drain durable liquidity from the banking system. 3. Both rounds were conducted in the secondary market under Section 17(8) of the Reserve Bank of India Act, 1934. Which of the statements given above is/are correct?

  1. The March 2026 round aggregates ₹1,00,000 crore in two tranches, whereas the December 2025–January 2026 round aggregated ₹2,00,000 crore in four tranches.
  2. Unlike OMO sales, outright OMO purchases always drain durable liquidity from the banking system.
  3. Both rounds were conducted in the secondary market under Section 17(8) of the Reserve Bank of India Act, 1934.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3
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