Question 1

The Reserve Bank of India was established in 1935 under the RBI Act. Which act was later amended to make RBI a wholly-owned subsidiary of the Government of India?

Accepted Answer

Reserve Bank of India Act 1934. The RBI Act 1934 was amended to formalize RBI's status as a central bank. The RBI took over the role of currency issuer from the Currency Department in 1935.

Question 2

The Monetary Policy Committee of the RBI has 6 members including the Governor. How many external members are appointed to this committee?

Accepted Answer

3. The MPC has 6 members: RBI Governor (Chair), Deputy Governor in charge of monetary policy, RBI staff member, and 3 external members appointed by the Central Government for 4 years.

Question 3

Under the Liquidity Adjustment Facility (LAF), the RBI conducts open market operations. What are the two rates under LAF?

Accepted Answer

Repo and Reverse Repo. LAF consists of Repo rate (lending rate) and Reverse Repo rate (deposit rate). These are the primary tools RBI uses to inject or absorb liquidity from the banking system.

Question 4

The Cash Reserve Ratio (CRR) is the percentage of Net Demand and Time Liabilities that banks must keep as reserves with the RBI. What is the current CRR as of 2024?

Accepted Answer

4%. The CRR was maintained at 4% by the RBI as of 2024. Banks must hold this percentage in cash reserves with the central bank to ensure liquidity and financial stability.

Question 5

The Statutory Liquidity Ratio (SLR) requires banks to maintain a percentage of their Net Demand and Time Liabilities in government securities and cash. What is the SLR rate?

Accepted Answer

18%. The SLR is maintained at 18% of NDTL. Banks must invest this amount in approved securities including government bonds and treasury bills to ensure stability.

Banking System, NPA & IBC — Set 1