As per the RBI Act, 1934, the following functions are described as the functions of a Central Bank : (i) Banking functions (ii) Advisory functions (iii) Supervisory functions (iv) Promotional functions Identify the correct combination :
(i), (iii) and (iv)
The functions of the Reserve Bank of India, which derive from the RBI Act, 1934 (read with the Banking Regulation Act, 1949), are usually grouped in Indian textbooks into three classes: central banking (traditional) functions, supervisory functions and promotional (developmental) functions.
Banking functions are recognised: the RBI issues currency notes, acts as banker to the Central and State Governments, is the bankers' bank and lender of last resort, controls credit and manages foreign exchange reserves.
Supervisory functions are recognised: the RBI licenses banks, regulates branch expansion, inspects banks and controls their management and liquidity.
Promotional functions are recognised: the RBI has promoted rural credit, the setting up of institutions such as IDBI, UTI and NABARD, deposit insurance and the extension of banking to priority sectors.
Advisory functions are not one of the three classes in this grouping; the advice the RBI gives the government on monetary and economic matters is treated as part of its role as banker to the government. Since many writers do list the RBI as financial adviser to the government, the exclusion of the advisory function is open to debate, but the answer key follows the three-way classification.
Hence, (i), (iii) and (iv).
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Important Questions from Reserve Bank of India
Which of the following is not the function of Reserve Bank of India?
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Who is the Governor of the Reserve Bank of India? (As of 2017)
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II. RBI maintains a current account of State Governments for keeping their cash balances.
III. Sir Benegal Rama Rau was the longest serving governor of RBI.
Which of the following functions of Reserve Bank of India are correct?
I. Banker to Banks
II. Currency Issuer
