Economics · Indian Money Market Instruments
An Indian commercial bank faces a temporary liquidity shortfall and needs to raise funds for a short-term period (e.g., 14 to 90 days) to meet its SLR requirements. It has high-quality Government Securities in its portfolio that can be pledged. Which of the following instruments is the most appropriate and common choice for the bank to secure these funds, and what is its maximum regulatory tenor?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Market Repo (Repurchase Agreement). Maximum Tenor: 1 year.✓
- 2Tri-party Repo (TREPS). Maximum Tenor: 3 months.
- 3Commercial Paper (CP). Maximum Tenor: 1 year.
- 4Certificate of Deposit (CD). Maximum Tenor: 3 years.
Correct answer
Market Repo (Repurchase Agreement). Maximum Tenor: 1 year.
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