Advertisements
Advertisements
Question
Explain the functions of the RBI with respect to the following:
- Custodian of foreign exchange reserves.
- Monopoly of note issue.
- Clearing house facility.
- Banker and fiscal agent to the government.
Solution
- Custodian of foreign exchange reserves: The Reserve Bank of India manages foreign exchange reserves to ensure market stability. The RBI intervenes in the foreign exchange market to keep rates within certain levels.
- Monopoly of note issue: The Reserve Bank of India is solely responsible for issuing currency notes. The RBI manages currency supply to keep prices stable and inflation under control.
- Clearing house facility: RBI provides clearing house facilities to facilitate the settlement of inter bank transactions i.e payments through cheques, drafts etc.
- Banker and fiscal agent to the government: The RBI supervises government transactions and accounts. It advises the government on monetary and fiscal policies. The RBI issues securities to the public to meet the government's financial needs.
APPEARS IN
RELATED QUESTIONS
Assertion (A): Central bank as a banker to the government, works as a custodian of foreign exchange reserves.
Reason (R): The Central bank acts as a Clearing house for the transfer and settlement of mutual claims of commercial banks.
Which function of RBI is indicated by the above image?
The Central bank is having the authority to regulate the amount of money supply in the economy.
Based on the above explain the following.
- Credit Rationing
- CRR
- Regulation of Margin Requirements
- Bank Rate
Central bank is the ______ of the country's foreign currency reserves.
______ is the main function of central bank.
Identify which of the following is not the function of the central bank?
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Reserve Bank of India creates credit.
Reason (R): Reserve Bank of India is known as a bank of note issue.
Give two reasons why the central banks enjoy monopoly of note issue.
Mention two ways in which the Reserve Bank of India assists the commercial banks.
The Central Bank is the apex monetary institution of the country. Explain its role of a Banker of the Government.
