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Question 1 of 5
In which year was the Reserve Bank of India established?
A 1935
B 1940
C 1947
D 1949
Why: The Reserve Bank of India (RBI) was established on 1 April 1935 under the Reserve Bank of India Act, 1934. It commenced operations on that date and was nationalized in 1949. This is a foundational fact about RBI's history and functions as the central bank.[1]
Question 2 of 5
RBI uses reverse repo to absorb liquidity. The statement is
A True
B False
C Partly True
D Does not apply
Why: Reverse repo is a monetary policy tool where RBI borrows funds from banks by selling securities with an agreement to repurchase them later at a higher price. This absorbs excess liquidity from the banking system, helping control inflation and stabilize money supply.[1]
Question 3 of 5
Through open market operation, the RBI purchase and sell
A foreign exchange
B gold
C government securities
D All of the above
Why: Open Market Operations (OMO) involve RBI buying and selling government securities (G-secs) in the open market to regulate liquidity and control interest rates. Buying injects liquidity, while selling absorbs it. This is a key function of RBI in monetary management.[1]
Question 4 of 5
Open market operation refers to-
A borrowing by scheduled banks from the RBI.
B borrowing by scheduled banks to industry and trade.
C Purchase and sale of government securities.
D deposit mobilisation.
Why: Open Market Operations (OMO) is RBI's primary tool for liquidity management, involving the purchase and sale of government securities. It influences money supply, interest rates, and inflation without direct intervention in bank lending.[1]
Question 5 of 5
Which of the following is a function of NABARD?
A Monitoring flow of ground level credit in agriculture
B Issuing currency notes
C Formulating monetary policy
D Regulating commercial banks
Why: While not directly RBI, NABARD's function relates to RBI's oversight of rural credit. RBI supervises NABARD, which monitors ground-level credit flow to agriculture, ensuring priority sector lending compliance.[1]