The Reserve Bank of India (RBI) acts as a bankers’ bank.

This would imply which of the following?

  1. Other banks retain their deposits with the RBI.
  2. The RBI lends funds to the commercial banks in times of need.
  3. The RBI advises the commercial banks on monetary matters.

Select the correct answer using the codes given below:

[UPSC Civil Services Exam – 2012 Prelims]

(a) 2, and 3 only

(b) 1 and 2 only

(c) 1 and 3 only

(d) 1, 2 and 3


Answer: (d)        

Explanation:

  • The central bank, often referred to as the apex bank, holds authority over the entire banking system of a country. It assumes the role of the sole issuer of currency and exercises control over the money supply in the economy.
  • As per the Reserve Bank of India Act, 1934, the central bank performs various functions:
  • Banking functions: The Reserve Bank acts as the banker, agent, and adviser to the Government of India and state governments. It undertakes banking operations for both the central and state governments and provides valuable advice on economic and monetary policy matters. It also manages the public debt of the government. Additionally, it performs similar functions for commercial banks, providing them with loans. Therefore, statements 1 and 2 are correct.
  • Supervisory functions: The central bank is responsible for supervising and regulating other banks, as well as monitoring and guiding governments during different economic conditions, particularly during periods of inflation or deflation in the economy.
  • Promotional functions: In addition to its regulatory role, the central bank engages in promotional functions such as integrating with global economies and maintaining foreign reserves. It represents the country’s economy at an international level.
  • Advisory functions: The central bank offers guidance and advice to commercial banks on monetary matters, assisting them in making informed decisions. Therefore, statement 3 is correct.

Consider the following statements:                                                                   The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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Consider the following statements:                                                         The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

Read More »
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