Banking Regulation and Monetary Policy

 Correct Ans. 1. In 2003, foreign banks were permitted for the first time to operate currency chests. Standard Chartered Bank — the largest and oldest foreign bank in the country was the first foreign bank to handle currency chests in India.

Correct Answer: Reserve Bank of India. Banknotes in India are currently being issued in the denomination of ₹ 10, ₹ 20, ₹ 50, ₹ 100 ₹ 500, and ₹ 1000. These notes are called banknotes as they are issued by the Reserve Bank of India (Reserve Bank). 

The RBI draws its regulatory powers from BOTH the RBI Act (1934) and the Banking Regulation Act (1949). The RBI Act establishes the RBI and gives it some powers, while the Banking Regulation Act specifically empowers it to regulate the banking sector. Option D correctly identifies both acts as the source of RBI's authority.

Statement D is INCORRECT - loans under the GCC (General Credit Card) scheme ARE part of Priority Sector Lending. The other statements are correct: GCCs are issued for rural/semi-urban areas (A), credit limit is Rs. 25,000 (B), and collateral is not required (C). The Priority Sector classification makes these loans important for financial inclusion.

 Comptroller of Currency operates National BankNet.

 Aadhaar card is considered as a valid address proof for opening a new account by RBI.

The Reserve Bank of India (RBI) is India's central bank and primary regulator for banking sector liquidity. It formulates and enforces liquidity frameworks like CRR, SLR, LCR, and liquidity coverage ratios to ensure banks maintain adequate liquid assets. State and Central governments don't directly set banking liquidity rules - that's the central bank's mandate.

The Reserve Bank of India (RBI) is India's central bank responsible for monetary policy, not fiscal policy. Monetary policy deals with credit availability and money supply, while fiscal policy is the government's domain involving taxation and spending.

Statutory liquidity ratio (SLR) is a term for reserve requirement that the commercial banks in India require to maintain in the form of gold and/or government approved securities before providing credit to the customers.

These are long term bonds issued by the post office where the capital is doubled in 5.5 years.

Cash Reserve Ratio (CRR) is the mandatory fraction of deposits that commercial banks must maintain with the Central Bank (RBI in India) in cash form. It's a monetary policy tool used to control money supply and lending capacity.

Regional Rural Banks were specifically established to provide banking services to rural areas, with priority given to small and marginal farmers, agricultural labourers, and artisans. This is their core mandated objective.

NABARD (National Bank for Agriculture and Rural Development) is India's apex development bank for rural sectors. While called a 'bank', it's primarily a development finance institution - but 'bank' (A) remains the most accurate among options.

The Tarapore Committee (II) was constituted to recommend measures for fuller capital account convertibility in India, building on earlier work toward financial liberalization and gradual opening of the capital account.

The RBI acts as lender of last resort for banks facing liquidity crises, providing emergency funds when banks cannot borrow elsewhere. Option A is incorrect because balance of payments is a broader concept than balance of trade (which only covers goods). Option B is factually incorrect as India maintains substantial foreign exchange reserves. Option C is wrong because devaluation is not a cure-all for balance of payments problems.