n NISM Certifications
XV NISM Series XV
Medium

Which of the following instruments is issued by RBI to absorb excess liquidity?

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Treasury Bills

  2. B

    Cash Reserve Ratio

  3. Open Market Operations

    Correct answer

  4. D

    Statutory Liquidity Ratio

Why this is the answer

RBI uses Open Market Operations (buying/selling government securities) to regulate liquidity. Selling securities absorbs liquidity, while buying injects it. Cash Reserve Ratio and Statutory Liquidity Ratio are regulatory tools but not market instruments.

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