Concept:RBI uses various instruments to control liquidity and interest rates in the economy.
Explanation:The Marginal Standing Facility (MSF) rate is fixed above the policy repo rate.
It is set at
25 basis points above the repo rate.
So, Statement I is correct.
Open market operations (OMOs) are conducted by the RBI through outright purchase and sale of government securities.
These operations are used to inject or absorb durable liquidity in the banking system.
So, Statement II is also correct.
Answer:Both statements are correct, hence Option C.