The correct answer is: B. sell securities in the open market.
The Reserve Bank of India (RBI) is the central bank of India. It was established on April 1, 1935, in accordance with the Reserve Bank of India Act, 1934. The RBI is responsible for formulating and implementing monetary policy, regulating the financial system, and issuing currency in India.
One of the tools that the RBI uses to control credit in the country is open market operations. Open market operations are the buying and selling of government securities by the RBI in the open market. When the RBI sells securities, it withdraws money from the banking system, which reduces the amount of credit available. When the RBI buys securities, it injects money into the banking system, which increases the amount of credit available.
The other options are incorrect because:
- Option A: Buying securities in the open market would inject money into the banking system, which would increase the amount of credit available.
- Option C: Reducing the CRR (cash reserve ratio) would require banks to hold less cash in reserve, which would allow them to lend more money.
- Option D: Reducing the bank rate would make it cheaper for banks to borrow money from the RBI, which would allow them to lend more money.
In conclusion, the RBI may sell securities in the open market in order to control credit in the country.