Question 1

The Reserve Bank of India (RBI) was established on April 1, 1935, based on the recommendations of which commission?

Accepted Answer

Hilton Young Commission. The Hilton Young Commission, also known as the Royal Commission on Indian Currency and Finance, recommended the creation of the RBI in 1926. This was aimed at separating the control of currency and credit from the government. The RBI initially started as a private shareholders' bank.

Question 2

Where was the first headquarters of the Reserve Bank of India located?

Accepted Answer

Kolkata. The central office of the RBI was initially established in Kolkata in 1935. It was permanently moved to Mumbai in 1937. Today, the central office is where the Governor sits and where policies are formulated.

Question 3

Under which Section of the RBI Act, 1934, does the RBI have the sole right to issue banknotes in India?

Accepted Answer

Section 22. Section 22 of the Reserve Bank of India Act, 1934, gives the RBI the exclusive authority to issue currency notes. This ensures uniformity in the currency system and control over the money supply. However, one-rupee notes and coins are issued by the Ministry of Finance.

Question 4

Who was the first Indian to serve as the Governor of the Reserve Bank of India?

Accepted Answer

C.D. Deshmukh. C.D. Deshmukh was the first Indian Governor of the RBI, appointed in 1943. He represented India at the Bretton Woods Conference in 1944. He later served as the Union Finance Minister of India.

Question 5

The RBI acts as a 'Lender of Last Resort'. What does this function primarily imply?

Accepted Answer

Providing emergency liquidity to banks. As the lender of last resort, the RBI provides liquidity to commercial banks facing temporary financial crises. This function helps maintain the stability of the banking system and prevents bank failures. It is a core central banking responsibility worldwide.

RBI Functions — Set 1