Consider the following statements:

1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest.
3. The Governor of the RBI draws his power from the RBI Act.

Which of the above statements are correct?

[UPSC Civil Services Exam – 2021 Prelims]

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Answer: (c)        

Explanation:

• Statement 1 is correct as the Governors of the Reserve Bank of India (RBI) are appointed by the government of India for a fixed duration.
• Statement 2 is incorrect because the RBI, established on April 1, 1935, under the Reserve Bank of India Act, 1934, is not a constitutional body. There is no specific provision in the Constitution of India granting the Central Government the authority to issue directives to the RBI in the public interest.
• Statement 3 is correct as the Governor of the RBI serves as the Chief Executive Officer of the central bank and holds the position of the ex-officio Chairman of its Central Board of Directors. The Governor derives his powers from the RBI Act.