________ is an instrument under the Liquidity Adjustment Facility (LAF) at which RBI lends to commercial banks.

Correct option is B

The correct answer is (b) Repo rate.
· Repo rate is the rate at which the Reserve Bank of India (RBI) lends short-term money to commercial banks under the Liquidity Adjustment Facility (LAF).
· When banks need funds, they can borrow from the RBI by selling securities with an agreement to repurchase them at a predetermined rate and date.
· The repo rate is a key tool used by the RBI to control inflation and manage liquidity in the economy.
Information Booster:
· Cash Reserve Ratio (CRR): The percentage of a bank's total deposits that must be kept in reserve with the RBI. It does not involve lending but serves to control the money supply.
· Bank Rate: The rate at which the RBI lends to commercial banks without any security. It is usually for a longer duration compared to the repo rate.
· Reverse Repo Rate: The rate at which the RBI borrows money from commercial banks. It is the opposite of the repo rate and is used to control the money supply.