Which one of the following activities of the Reserve Bank of India is considered to be part of…

Which one of the following activities of the Reserve Bank of India is considered to be part of 'sterilization'?
  1. Conducting 'Open Market Operations'
  2. Oversight of settlement and payment systems
  3. Debt and cash management for the Central and State Governments
  4. Regulating the functions of Non-banking Financial Institutions

Solution

Sterilization refers to RBI offsetting the monetary impact of forex flows by absorbing/injecting rupee liquidity through Open Market Operations.

Asked in: UPSC Prelims 2023

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