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Question 1 of 5
The chairman of the Central Board of RBI is
A Governor
B Deputy Governor
C Finance Minister, Govt. of India
D Prime Minister
Why: The Central Board of Directors of the RBI is headed by the Governor, who serves as the chairman. This is a key structural feature of the RBI's governance, ensuring centralized leadership in policy-making and oversight.
Question 2 of 5
Which of the following is true about the functions performed by RBI? (i) It is the Bank of Issue (ii) It acts as banker to the Government (iii) It is the banker of other banks (iv) It regulates the flow of credit
A Both (i) and (ii)
B Both (iii) and (iv)
C All the Above
D None of the above
Why: All four statements are correct functions of the RBI. As the Bank of Issue, it issues currency; it acts as banker to the government by managing public accounts; it serves as banker to other banks through clearing and settlement; and it regulates credit flow via monetary policy tools.
Question 3 of 5
To control inflation and tackle the problem of exchange liquidity due to foreign exchange inflows, the RBI
A Sells government securities
B Purchase securities
C Decrease bank rate
D Raise interest rate
Why: Selling government securities in open market operations absorbs excess liquidity from the system, helping control inflation caused by foreign exchange inflows. This is a standard tool used by RBI for monetary management.
Question 4 of 5
RBI regulates which type of financial institutions?
A All banks
B Only commercial banks
C Only cooperative banks
D Only foreign banks
Why: RBI regulates all banks including commercial, cooperative, regional rural, and payment banks as part of its supervisory functions to ensure stability in the banking system.
Question 5 of 5
The preamble of the RBI does not include which of the following basic functions of the bank?
A To regulate the issue of Banknotes and keeping of reserves
B To have a modern monetary policy framework
C To operate the currency and financial market system of the country to its advantage
D To maintain price stability
Why: The RBI preamble focuses on regulating banknotes, reserves for monetary stability, modern monetary policy, and price stability while promoting growth. Operating the financial market system 'to its advantage' is not explicitly stated.