Which one is not true regarding the Market Stabilization Scheme (MSS)?

CA Foundation · Business Economics · MTP · September 2025
Which one is not true regarding the Market Stabilization Scheme (MSS)?
(A) A. It absorbs surplus liquidity of enduring nature arising out of large capital flows
(B) B. It absorbs surplus liquidity through sale of short, dated government securities and treasury bills
(C) C. Mobilised surplus liquidity is held in the MSS accounts with the RBI
(D) D. MSS account liquidity can be used for normal government expenditure of capital nature

Suggested Answer and Working Notes:

Correct Answer: Option (D)

D. MSS account liquidity can be used for normal government expenditure of capital nature

Topics: Money Market

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