RBI & Policy — Set 3
Economics · RBI और नीति · Questions 21–30 of 120
Who has the casting vote in the meetings of the Monetary Policy Committee (MPC)?
Correct Answer: D. RBI Governor
In case of a tie during voting on policy rates, the RBI Governor has a second or casting vote. This ensures that a decision is reached even if the six members are equally divided. The MPC's decisions are based on a majority vote.
Which section of the RBI Act empowers the Government to give directions to the RBI in public interest?
Correct Answer: A. Section 7
Section 7 of the RBI Act, 1934, allows the Central Government to issue directions after consultation with the Governor. This provision is rarely invoked to preserve the autonomy of the central bank. It is intended for use only in extraordinary situations.
The rate at which the RBI is prepared to buy or rediscount bills of exchange or other commercial papers is?
Correct Answer: A. Bank Rate
The Bank Rate is the long-term lending rate of the central bank. It is also known as the discount rate. It has largely been replaced by the Repo Rate for day-to-day liquidity management but is still used for calculating penalties.
What is the primary objective of the RBI's monetary policy as per the modified RBI Act?
Correct Answer: D. Price stability
The primary goal is to maintain price stability while keeping in mind the objective of growth. Since 2016, the RBI has followed a flexible inflation targeting framework. The target is to keep CPI inflation at 4% with a band of +/- 2%.
Which institution acts as the regulator of the Digital Payments system in India?
Correct Answer: B. RBI
The RBI regulates all payment and settlement systems under the PSS Act, 2007. It oversees platforms like UPI, RTGS, and NEFT to ensure security and efficiency. The RBI has been a key driver in India's transition to a less-cash economy.
The 'Ways and Means Advances' (WMA) facility provided by the RBI is for?
Correct Answer: D. Central and State Governments
WMA is a temporary loan facility to help governments tide over mismatches in their receipts and payments. It is not a permanent source of finance and must be repaid within three months. This facility ensures that government expenditure remains smooth.
Which currency note was the first to be issued by the RBI in 1938?
Correct Answer: A. ₹5 note
The first banknote issued by the RBI was the ₹5 note in January 1938, featuring King George VI. Later that year, notes of ₹10, ₹100, ₹1,000, and ₹10,000 denominations were introduced. The RBI took over the note-issuing function from the Government of India.
Which of the following is a 'Qualitative' tool of monetary policy?
Correct Answer: D. Moral Suasion
Moral suasion involves the RBI using persuasion and informal pressure on banks to follow its guidelines. Unlike quantitative tools, it does not involve legal force or direct changes in ratios. It is a selective credit control method used to influence bank behavior.
The 'Market Stabilization Scheme' (MSS) was introduced by the RBI to?
Correct Answer: B. Absorb excess liquidity from large capital inflows
The MSS was launched in 2004 to manage the liquidity impact of significant foreign exchange inflows. The RBI issues special government bonds under this scheme to mop up excess cash. The money collected is kept in a separate account and not used for government spending.
The Marginal Standing Facility (MSF) rate is generally higher than the?
Correct Answer: C. Repo Rate
MSF is a window for banks to borrow from the RBI in emergency situations when inter-bank liquidity dries up. It is pegged at a higher rate (usually 25 basis points above the Repo Rate) to discourage its use. Banks can use a portion of their SLR securities as collateral for MSF.