Reserve Bank of India would like to increase the cash reserves of the commercial Banks. Which among the following would be most appropriate action of the RBI to achieve this aim?
Reserve Bank of India would like to increase the cash reserves of the commercial Banks. Which among the following would be most appropriate action of the RBI to achieve this aim?
[A]RBI would release gold from its reserves
[B]RBI would raise the reserve ratio
[C]RBI would buy the bonds in the open market
[D]RBI will stop the transactions which involve the bills of exchange
RBI would buy the securities in the open market
RBI buys securities from the market, it releases liquidity and banks have more money with them in the form of Cash reserves.