Question

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 of India

4. It handles the borrowing programme of Government of India

Which of these statements are correct?

(a) 1 and 2 (b) 2, 3 and 4 (c) 1, 2, 3 and 4 (d) 3 and 4

Answer 1

(c) 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 settling inter bank transactions. It follows an independent monetary policy.