RBI & Policy — Set 9
Economics · RBI और नीति · Questions 81–90 of 120
Which act serves as the primary legal framework for the RBI's functioning?
Correct Answer: C. RBI Act, 1934
The RBI Act, 1934, provided the statutory basis for the establishment and operation of the central bank. It defines the bank's powers, functions, and relationship with the government. Most monetary policy tools are derived from the provisions of this act.
What is the primary motive behind 'Reverse Repo' operations?
Correct Answer: A. Absorbing excess liquidity
The RBI uses Reverse Repo to take out excess cash from the banking system. It offers banks an interest rate to park their money with the RBI. This reduces the funds available for lending, helping to control inflation.
The Reserve Bank of India acts as the custodian of?
Correct Answer: A. Foreign Exchange Reserves
The RBI is the sole custodian and manager of India's foreign exchange reserves. This includes foreign currencies, gold, and SDRs. Proper management of these reserves is vital for maintaining the external stability of the economy.
Which rate is known as the 'Policy Rate' in India?
Correct Answer: B. Repo Rate
The Repo Rate is the primary policy rate because it is the main tool used by the RBI to signal its monetary stance. Most other interest rates in the economy follow the movements of the repo rate. It is decided by the Monetary Policy Committee.
The RBI's headquarters moved from Calcutta to which city in 1937?
Correct Answer: A. Mumbai
Mumbai became the permanent home of the RBI's central office in 1937. This move reflected Mumbai's growing importance as India's financial capital. All major policy decisions are now made from the Mumbai headquarters.
Who is the Chairperson of the Monetary Policy Committee (MPC)?
Correct Answer: A. RBI Governor
The Governor of the RBI is the ex-officio chairperson of the MPC. This ensures that the central bank leads the decision-making on interest rates. The Governor also has a casting vote in case of a tie.
Which of the following is a quantitative tool of RBI?
Correct Answer: C. Repo Rate
Quantitative tools like the Repo Rate affect the total volume of credit in the economy. They are general tools that apply to all banks and sectors. In contrast, qualitative tools target specific sectors or behaviors.
What is the 'Accounting Year' of the RBI as per latest alignment?
Correct Answer: C. April-March
The RBI changed its accounting year from July-June to April-March in 2021. This was done to align with the central government's fiscal year. It allows for better synchronization of economic data and budgeting.
Which entity issues ₹1 notes in India?
Correct Answer: B. Government of India
The Government of India (Ministry of Finance) issues one-rupee notes. Unlike other notes, it carries the signature of the Finance Secretary. The RBI acts only as the distributing agent for these notes.
The term 'Repo' stands for?
Correct Answer: B. Repurchase Option
Repo stands for Repurchase Option or Repurchase Agreement. It involves selling a security with an agreement to buy it back at a later date at a higher price. The difference in price represents the interest rate.