Which of the following is/are the tool(s) of monetary policy of the RBI? I.…

The RBI regulates money supply and liquidity in the economy through a set of monetary policy instruments. These are broadly split into quantitative tools — the Policy Repo Rate, Reverse Repo Rate, Bank Rate, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Marginal Standing Facility (MSF), and Open Market Operations (OMO) — and qualitative tools such as moral suasion and selective credit control.

Repo Rate is the rate at which RBI lends short-term funds to banks against government securities under the Liquidity Adjustment Facility (LAF); Reverse Repo Rate is the corresponding LAF rate at which RBI absorbs excess liquidity from banks (the fixed reverse repo rate, alongside the newer Standing Deposit Facility that now anchors the LAF floor); Bank Rate is the standard rate at which RBI is prepared to buy or rediscount eligible bills of exchange or other commercial paper, as defined under Section 49 of the RBI Act, 1934, and is today aligned with the MSF rate for penal-interest purposes. All three — Reverse Repo Rate, Repo Rate, and Bank Rate — are therefore official RBI monetary policy rates.

Any combination that leaves out one of these three understates the RBI's toolkit:

• Reverse Repo Rate and Repo Rate alone omits Bank Rate, though Bank Rate is a statutory RBI Act rate and still an active tool.

• Repo Rate and Bank Rate alone omits Reverse Repo Rate, which remains an officially notified LAF rate that RBI uses to absorb surplus liquidity from banks.

• Bank Rate alone omits both Repo Rate and Reverse Repo Rate, the two most actively used Liquidity Adjustment Facility rates.

Since Reverse Repo Rate, Repo Rate, and Bank Rate are all genuine RBI monetary policy tools, the correct combination is I, II and III.