RBI Grade B Officers 2017 jun Paper

(3) LAF stands for Liquidity AdjustmentFacility. It is a monetarypolicy to which allowsbanks borrow money throughrepurchase agreements. LAFconsists of repo and reverserepo operations. Repo or repurchaseoption is a collaterisedlending i.e. banks borrowmoney from RBI to meet shortterm needs by selling securities.Reverse repo operation iswhen RBI borrows money frombanks by lending securities.