Question

The interest rates of banks are determined and regulated by which of the following organizations?
1. Reserve Bank of India
2. Finance Ministry
3. SEBI
4. State Bank of India

Answer 1

Correct Answer - Option 1 : Reserve Bank of India

The correct answer is the Reserve Bank of India.

• The interest rates of banks are determined and regulated by the Reserve Bank of India.

• Reserve Bank of India (RBI):
  • RBI was set up on the basis of the Hilton Young Commission recommendation in April 1935, with the enactment of the RBI Act, 1934.
  • Its first Governor was C.D. Deshmukh.
  • The headquarters of RBI is in Mumbai.
  • Current Governor is Shaktikanta Das.
  • It is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country.
  • It keeps the reserves of all commercial banks and hence is known as the ‘Reserve Bank’.