Multiple choice

Consider the following statements regarding Reserve Bank of India:

  1. It is a banker to the Central Government.
  2. It formulates and administers monetary policy.
  3. It acts as an agent of the Government in respect to India.
  4. It handles the borrowing programme of Government of India.

Which of these statements are correct?

  1. 1 and 2

  2. 2, 3 and 4

  3. 1, 2, 3 and 4

  4. 3 and 4
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Functions of RBI: sole authority to issue currency; government’s bank; banker’s bank; guardian of money market; lender of the last resort; sole reservoir of foreign exchange reserves; controller of credit; clearing house for setting inter bank transactions. It follows an independent monetary policy.

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