Q. What will be the impact on the cash reserves of commercial banks if RBI conducts a sale of securities ?
Answer: Decrease
Notes: When the Reserve Bank of India (RBI) conducts a sale of securities, it effectively withdraws cash from the banking system. Banks purchase these securities, which reduces their cash reserves. This action is part of the RBI's monetary policy to control liquidity and inflation. A decrease in cash reserves can lead to tighter credit conditions in the economy.