RBI Functions — Set 5
Banking · RBI के कार्य · Questions 41–50 of 80
The 'Marginal Cost of Funds based Lending Rate' (MCLR) was introduced by the RBI to improve?
Correct Answer: C. Monetary policy transmission to borrowers
MCLR was introduced to ensure that changes in RBI policy rates (like Repo) are passed on to borrowers more effectively by banks. It replaced the old Base Rate system to make lending rates more transparent. This helps in making the monetary policy more impactful at the ground level.
Which organization is a wholly-owned subsidiary of the RBI and provides insurance on bank deposits?
Correct Answer: D. DICGC
Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the RBI. It insures all types of bank deposits (savings, fixed, current) up to Rs. 5 Lakh per depositor per bank. This insurance provides a safety net to small savers in case of bank failure.
The RBI uses the 'Consumer Price Index' (CPI) primarily for?
Correct Answer: D. Targeting inflation in monetary policy
The RBI has adopted the CPI (Combined) as the key measure of inflation for its monetary policy targets. Earlier, the Wholesale Price Index (WPI) was used, but CPI better reflects the price changes felt by consumers. The current target is 4% inflation with a band of +/- 2%.
What is 'Fiat Money' as regulated by the RBI?
Correct Answer: B. Currency that has no intrinsic value but is legal tender
Fiat money is currency issued by the RBI that is not backed by a physical commodity like gold. Its value comes from the government's decree that it is legal tender for all debts. Every RBI note carries the Governor's promise to pay the bearer the sum mentioned.
Which specialized department in the RBI focuses on 'Financial Inclusion' and development of rural credit?
Correct Answer: B. Financial Inclusion and Development Department (FIDD)
FIDD is the department that works on bringing banking services to the unbanked population. It coordinates the 'Priority Sector Lending' targets and works closely with NABARD. Financial inclusion is a key developmental goal for the RBI.
The RBI acts as the 'Custodian of Foreign Exchange'. What does this mean?
Correct Answer: C. It manages and maintains the country's reserves of foreign currencies
The RBI holds and manages India's foreign currency assets and gold reserves. This allows the bank to intervene in the market to prevent excessive volatility in the exchange rate. Having healthy reserves is crucial for a country's economic sovereignty.
Who is the appointing authority for the RBI Governor and Deputy Governors?
Correct Answer: A. Central Government (Appointments Committee of the Cabinet)
The appointments for the top posts in the RBI are made by the Central Government. Specifically, the Appointments Committee of the Cabinet (ACC) takes these decisions. They are typically appointed for a period not exceeding five years and are eligible for reappointment.
The RBI's role as a 'Regulatory and Supervisory' authority covers which of the following?
Correct Answer: C. Commercial Banks, Co-operative Banks, and NBFCs
The RBI's supervisory umbrella extends to all commercial banks, regional rural banks, urban co-operative banks, and non-banking financial companies. This wide coverage ensures that the entire financial intermediary system remains stable. It issues guidelines on capital adequacy, asset quality, and management.
Under the 'Reserve Bank of India Act, 1934', the RBI can issue banknotes of what maximum denomination?
Correct Answer: A. Rs. 10,000
The RBI Act allows for the issuance of notes in denominations up to Rs. 10,000. In India's history, Rs. 10,000 notes have been issued twice (in 1938 and 1954) but were later demonetized. Any denomination above this would require an amendment to the Act.
Which of the following is a 'Direct' instrument of monetary policy used by the RBI?
Correct Answer: A. Cash Reserve Ratio (CRR)
CRR is considered a direct instrument because it directly locks away a portion of bank funds. Indirect instruments, like the Repo rate, influence liquidity through the price of money. Direct tools are very effective during high inflation or financial instability.