Q. Which of the following statements best defines the objective of a Switch Auction conducted by the Reserve Bank of India (RBI)?

[A] To increase liquidity in the banking system by purchasing government securities from commercial banks.

[B] To manage the maturity profile of public debt by replacing short-term securities with longer-term ones.

[C] To reduce the fiscal deficit by cancelling high-interest government bonds.

[D] To raise fresh capital for infrastructure projects through sovereign bond sales.

Answer: B
Notes:

Explanation: A Switch Auction, initiated by the RBI in 2019 on behalf of the Government of India, aims to restructure public debt by exchanging shorter-tenure government securities with longer-dated securities. This helps in smoothing the redemption pressure and ensures better cash flow management for the government.

Source- ET

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