Which one of the following activities of the Reserve Bank of India is considered to be part of 'sterilization'?

Lists RBI core functions as separate items: Monetary Policy, Bank Supervision and Regulation, and Overseeing the Payments System—implying oversight of payments is a distinct function.

A student could infer that since 'monetary policy' and 'overseeing the payments system' are separately named, oversight is likely not the same as sterilization (a monetary policy tool).

Defines 'sterilization' as monetary operations to offset capital inflows, typically via open market operations (selling treasury bills/securities).

A student can use this definition to check whether payment-system oversight involves selling/buying securities — if not, it likely isn't sterilization.

Describes RBI's developmental and regulatory role specifically in payment and settlement systems under the PSS Act, showing oversight is a regulatory/developmental activity.

A student could contrast regulatory/developmental activities with the transactional asset-operations described for sterilization to judge they are different categories.

Explains that commercial-bank reserves with the RBI can be held partly in financial instruments (bonds and T-bills) issued by the RBI — the very instruments used in sterilization.

A student could note sterilization uses securities/reserve-management instruments, and then ask whether payment-system oversight routinely involves those instruments; absence would argue against treating oversight as sterilization.

Shows RBI administers the Payment and Settlement Systems Act, 2007, indicating oversight is a statutory regulatory role rather than an open-market monetary operation.

A student could extend this by checking definitions of statutory regulatory roles versus monetary policy tools to distinguish oversight from sterilization.

Gives a working definition of 'sterilization' as central bank operations (especially selling treasury bills and securities via open market operations) that reduce the domestic monetary base to offset inflows.

A student could use this definition plus knowledge of whether a given debt/cash operation involves outright sales or repos of government securities to judge if it is a sterilizing action.

States RBI 'manages the public debt' and 'arranges for investments of surplus cash balances' for governments—showing RBI conducts debt and cash operations on behalf of the state.

Combine this with the sterilization rule: if RBI's debt/cash management entails selling or absorbing liquidity through securities, those operations could have sterilizing effects.

Describes Cash Management Bills (short-term T-bill–like instruments) used to meet temporary government cash mismatches — a tool of cash management.

A student could ask whether issuance or RBI transactions in CMBs alter the domestic monetary base (e.g., absorb liquidity) and thus function like sterilization operations.

Notes RBI historically took over management of government accounts and public debt, indicating the central bank is the operational agent for such fiscal instruments.

Using this, a student can infer the RBI has the capacity to use debt-management instruments in ways that may be sterilizing (if they affect money supply via OMOs).

States legal/operational constraints: central government shall not borrow from RBI except temporary advances and RBI must not subscribe to primary issues since 2006–07—pointing to institutional limits on direct monetization.

A student could combine this with the sterilization definition to reason that some debt/cash operations (direct RBI financing) are constrained, so only certain debt-management transactions can act as sterilization.

States RBI's regulatory and supervisory functions explicitly extend to Non‑Banking Financial Institutions (NBFCs).

A student could contrast this stated regulatory role with a standard definition of 'sterilization' (monetary operations to offset foreign inflows) to judge whether regulatory oversight is the same kind of activity.

Notes RBI's focus on 'core central banking functions like Monetary Policy, Bank Supervision and Regulation', listing monetary policy separately from supervision/regulation.

One could use the separation to infer that regulatory actions and monetary policy operations (including sterilization) are distinct categories and then check whether regulation of NBFCs involves open‑market or reserve‑affecting operations.

Example question lists 'liquidity of assets' as a matter RBI regulates for banks, connecting RBI regulation to liquidity management.

A student could extend this by asking whether RBI's liquidity/regulatory measures for NBFCs operate via balance‑sheet money supply tools (similar to sterilization) or via prudential rules that do not directly offset foreign exchange flows.

States that Scheduled Banks must maintain reserve requirements with RBI, highlighting RBI's role in administering reserve requirements.

A student could combine this with the definition of sterilization (actions that alter reserves to neutralize external flows) to test whether NBFC regulation changes reserves in a way comparable to sterilization.

Describes the scope and legal powers of RBI over NBFCs (including post‑2019 amendment), showing RBI's authority to take administrative/remedial actions vis‑à‑vis NBFCs.

Using this, one could examine whether those statutory/regulatory powers typically involve market operations (sterilization) or administrative measures (supervision), informing whether regulation equates to sterilization.