RBI Functions — Set 6
Banking · RBI के कार्य · Questions 51–60 of 80
The RBI's 'Liquidity Adjustment Facility' (LAF) allows banks to borrow funds through which mechanism?
Correct Answer: A. Repurchase Agreements (Repo)
LAF operates through Repo and Reverse Repo auctions. It allows banks to manage their daily liquidity mismatches by borrowing against government securities. This is the primary tool used by the RBI for day-to-day liquidity management.
The RBI's 'Department of Payment and Settlement Systems' (DPSS) regulates which of the following?
Correct Answer: B. Digital payment systems like NEFT, RTGS, and UPI
The DPSS is responsible for ensuring that payment systems in India are safe, efficient, and accessible. It regulates various platforms like credit cards, mobile wallets, and inter-bank transfer systems. This oversight is vital for the growth of the digital economy.
What is the 'Cash Reserve Ratio' (CRR) primarily intended for?
Correct Answer: A. Ensuring banks have cash to pay depositors and controlling money supply
CRR serves as a safety buffer to ensure that banks can meet depositors' withdrawal demands. Economically, it is used by the RBI to suck out or inject liquidity into the banking system. Higher CRR reduces the amount of money banks can lend to customers.
Which of the following acts as the 'Secretariat' for the Monetary Policy Committee?
Correct Answer: A. Monetary Policy Department of the RBI
The Monetary Policy Department (MPD) of the RBI provides all necessary data and research to the MPC. It assists the committee in formulating policy decisions. The MPD monitors the impact of policy changes on the economy.
In the case of a tie in the Monetary Policy Committee (MPC) voting, who has the 'Casting Vote'?
Correct Answer: B. The Governor of RBI
Each member of the MPC has one vote, but the Governor has a second or 'casting vote' in the event of an equality of votes. This ensures that a clear decision can always be reached on policy rates. The voting record of each member is published in the minutes.
What is the frequency of the 'Bi-monthly' monetary policy review by the RBI?
Correct Answer: C. Once every two months
The RBI reviews its monetary policy every two months (bi-monthly). This allows the bank to respond to changing economic conditions in a timely manner. However, the RBI can also hold off-cycle meetings in case of emergencies.
The RBI is not required to maintain any reserve against which of the following?
Correct Answer: D. Coins and One Rupee notes
Coins and one-rupee notes are issued by the Government of India, not the RBI. The RBI only acts as an agent for their distribution. Therefore, the RBI's reserve requirements apply only to the banknotes it issues (Rs. 2 and above).
Which of the following is a 'Quantitative' tool of credit control?
Correct Answer: C. Statutory Liquidity Ratio (SLR)
SLR is a quantitative tool because it affects the total lending capacity of the banking system by requiring banks to hold liquid assets. Qualitative tools, like margin requirements, affect only specific types of loans. SLR is often used to ensure government bonds have a steady market.
The 'Bank of Issue' function of the RBI means that it has the monopoly to?
Correct Answer: D. Issue currency notes
The RBI has the exclusive right to issue banknotes in India. This ensures uniformity and trust in the national currency. Only one-rupee notes and coins are issued by the Government.
Which function of the RBI helps in controlling inflation?
Correct Answer: A. Monetary Policy
Monetary Policy is the primary tool used by the RBI to control inflation. By adjusting interest rates, it regulates the money supply in the economy. This helps maintain price stability.