RBI & Policy — Set 12
Economics · RBI और नीति · Questions 111–120 of 120
Who appoints the Governor of the Reserve Bank of India?
Correct Answer: A. Central Government
The Central Government appoints the Governor and Deputy Governors of the RBI. The appointments are typically for a period of three to five years. The candidates are shortlisted by the Financial Sector Regulatory Appointments Search Committee.
Which note bears the signature of the RBI Governor?
Correct Answer: C. All currency notes
The RBI Governor signs all currency notes except for the one-rupee note. This signature acts as a guarantee for the value of the note. The text 'I promise to pay the bearer...' is found above the signature.
Which committee recommended the creation of the RBI?
Correct Answer: C. Hilton Young Commission
The Hilton Young Commission made the recommendation in 1926. It suggested that a central bank was needed to separate the control of currency and credit from the government. This was to ensure better economic stability.
What is the name of the overnight lending facility through which the RBI lends money to commercial banks at a rate above the repo rate?
Correct Answer: C. Marginal Standing Facility (MSF)
The Marginal Standing Facility (MSF) is an overnight lending window created by the RBI in 2011 under which scheduled commercial banks can borrow funds from the RBI at a rate higher than the repo rate (typically 0.25% above). Banks use this facility when they have exhausted their borrowing limit under the Liquidity Adjustment Facility (LAF). The MSF acts as a safety valve for liquidity management. The higher rate discourages excessive borrowing and ensures banks use it only as a last resort for overnight liquidity needs.
What is the maximum number of Deputy Governors RBI can have?
Correct Answer: C. 4
The RBI Act allows for a maximum of four Deputy Governors. Usually, two are promoted from within the RBI, and two are external experts. They assist the Governor in managing various departments.
In which year was the Banking Regulation Act passed?
Correct Answer: D. 1949
The Banking Regulation Act was passed in 1949, the same year as RBI's nationalization. It gives the RBI the power to license, supervise, and regulate commercial banks. This act is the pillar of bank regulation in India.
Which of the following is a qualitative tool of credit control?
Correct Answer: D. Margin Requirements
Margin requirement is a qualitative tool where RBI sets the difference between the value of collateral and the loan amount. It is used to control credit for specific sensitive sectors. Quantitative tools, on the other hand, affect the overall money supply.
What is the current inflation target band set by the government for the RBI?
Correct Answer: C. 2% to 6%
The official inflation target is 4%, with a tolerance band of +/- 2%. This means the RBI aims to keep inflation between 2% and 6%. This framework provides a predictable target for monetary policy.
The 'Repo Rate' is the rate at which?
Correct Answer: D. RBI lends to banks
Repo rate is the interest rate at which the RBI provides liquidity to banks against government securities. It is the most important policy rate in the Indian economy. An increase in repo rate usually leads to higher interest rates for home and car loans.
Which department of RBI manages the issuance of coins?
Correct Answer: B. Currency Management
While the Government of India mints the coins, the RBI's Department of Currency Management handles their distribution. Coins are issued under the Coinage Act. The RBI acts as an agent of the government for this purpose.