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Which of the following is the apex banking institution of India that regulates the monetary policy?
1. State Bank of India
2. Bank of India
3. Reserve Bank of India
4. Axis Bank

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Correct Answer - Option 3 : Reserve Bank of India

The correct answer is the Reserve Bank of India.

Reserve Bank of India is the apex banking institution of India that regulates the monetary policy.

  • The Reserve Bank Of India is the apex banking institution.
  • It has a basic function “to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.” 
  • It commenced operations on April 1, 1935, is at the centre of India’s financial system. Hence it is called the Central Bank.
  • It has a fundamental commitment to maintaining the nation’s monetary and financial stability.
  • It started as a private share-holders’ bank – but was nationalized in 1949, under the Reserve Bank (Transfer of Public Ownership) Act, 1948.
  • It is a banker to the Central Government, State Governments and Banks.

  • Key functions of RBI Include:
    • Monetary policy.
    • Supervision of Banking companies, Non-banking Finance Companies and Financial Sector, Primary Dealers and Credit Information Bureaus.
    • Regulation of money market, government securities market, foreign exchange market, and derivatives linked to these markets.
    • Management of foreign currency reserves of the country and its current and capital account.
    • Issue and management of currency.
    • Oversight of payment and settlement systems.
    • Development of the banking sector.
    • Research and statistics.
    • finance companies are regulated by RBI.

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