RBI Functions — Set 1
Banking · RBI के कार्य · Questions 1–10 of 80
The Reserve Bank of India (RBI) was established on April 1, 1935, based on the recommendations of which commission?
Correct Answer: D. 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.
Where was the first headquarters of the Reserve Bank of India located?
Correct Answer: B. 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.
Under which Section of the RBI Act, 1934, does the RBI have the sole right to issue banknotes in India?
Correct Answer: D. 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.
Who was the first Indian to serve as the Governor of the Reserve Bank of India?
Correct Answer: B. 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.
The RBI acts as a 'Lender of Last Resort'. What does this function primarily imply?
Correct Answer: D. 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.
Which of the following is NOT a qualitative tool of monetary policy used by the RBI?
Correct Answer: C. Cash Reserve Ratio (CRR)
The Cash Reserve Ratio (CRR) is a quantitative tool because it affects the total volume of credit in the economy. Qualitative tools, like moral suasion, target the direction and use of credit. CRR refers to the percentage of deposits banks must keep with the RBI.
The Reserve Bank of India manages the Foreign Exchange Reserves of India under which act?
Correct Answer: D. Foreign Exchange Management Act (FEMA), 1999
The RBI manages foreign exchange under the FEMA, 1999, to facilitate external trade and payments. This function is vital for maintaining the external value of the Indian Rupee. It involves the purchase and sale of foreign currencies in the market.
What is the maximum number of Deputy Governors the RBI can have at any given time?
Correct Answer: A. Four
The RBI Act provides for a maximum of four Deputy Governors to assist the Governor. Usually, two are promoted from within the RBI, one is a commercial banker, and one is an economist. They are appointed by the Central Government for specific terms.
The 'Bank Rate' is the rate at which the RBI is prepared to?
Correct Answer: D. Buy or rediscount bills of exchange from banks
The Bank Rate is the standard rate at which the RBI buys or rediscounts long-term bills of exchange. It is a long-term monetary policy tool that influences the cost of credit. Nowadays, it is aligned with the Marginal Standing Facility (MSF) rate.
Which organization's functions include 'Issuer of License' for new commercial banks in India?
Correct Answer: A. Reserve Bank of India
The RBI has the power to grant licenses for the commencement of banking operations under the Banking Regulation Act, 1949. This ensures that only financially sound entities enter the banking sector. The RBI can also cancel licenses if a bank fails to comply with regulations.