RBI & Policy — Set 11
Economics · RBI और नीति · Questions 101–110 of 120
Which rate is also known as the 'Discount Rate'?
Correct Answer: A. Bank Rate
The Bank Rate is historically referred to as the Discount Rate because it was the rate at which RBI rediscounted bills. Today, it is used more as a penal rate for banks. It is generally higher than the Repo Rate.
What is the primary measure of inflation used by RBI for its policy target?
Correct Answer: A. CPI (Combined)
The RBI uses the Consumer Price Index (Combined) as its primary gauge for inflation. This reflects the price changes at the retail level for consumers. The target is set at 4% with a tolerance band of 2%.
The 'Moral Suasion' method of credit control is a?
Correct Answer: B. Qualitative tool
Moral suasion is a qualitative or selective credit control tool. It involves the RBI persuading banks to follow specific lending policies without formal rules. It is an informal way to influence the credit market.
Which subsidiary of RBI facilitates the insurance of bank deposits?
Correct Answer: D. DICGC
DICGC (Deposit Insurance and Credit Guarantee Corporation) provides insurance for deposits in all commercial and cooperative banks. The current limit is ₹5 lakh per depositor per bank. This protects small savers in case of bank failures.
The 'Minimum Reserve System' for issuing currency was adopted in?
Correct Answer: D. 1956
In 1956, the RBI moved to the Minimum Reserve System for backing the currency notes it issues. It requires a minimum reserve of ₹200 crore in gold and foreign securities. This system allows for more flexibility in issuing currency as per economic needs.
Which city is the headquarters of the RBI?
Correct Answer: A. Mumbai
The RBI is headquartered in Mumbai, the financial capital of India. The Central Office is located here, where the Governor and Deputy Governors work. It was moved from Kolkata in 1937.
How many members are nominated by the Government of India to the RBI Central Board?
Correct Answer: D. 10
The government nominates 10 directors from various fields and two government officials to the board. Including the Governor and Deputy Governors, the board has a total of 21 members. This ensures diverse expertise in the bank's governance.
Which of the following is a function of the RBI?
Correct Answer: A. Regulating Money Market
The RBI is the regulator of the money market in India. It manages short-term liquidity and interest rates. The stock market is regulated by SEBI, and insurance by IRDAI.
The 'Reverse Repo Rate' is used by RBI to?
Correct Answer: B. Absorb liquidity
The correct answer is 'Absorb liquidity'. Reverse Repo Rate is the interest RBI pays to banks for parking their funds. By increasing this rate, the RBI encourages banks to keep more money with it. This effectively reduces the money supply in the market.
What is 'Narrow Money' in RBI terminology?
Correct Answer: B. M1
M1 is referred to as Narrow Money as it includes the most liquid assets. It consists of currency with the public and demand deposits with banks. It does not include time deposits like FDs.