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What is the primary function of the Reserve Bank of India (RBI)?
Managing foreign trade
Issuing currency and regulating credit
Collecting income tax
Managing state budgets
Issuing currency and regulating credit
The Reserve Bank of India (RBI) serves as the country's central banking institution, controlling the monetary policy of the Indian rupee. Its primary constitutional and statutory functions include issuing currency notes (except one-rupee notes and coins) and regulating the flow of credit in the economy to maintain price stability while keeping in mind the objective of growth.
The Reserve Bank of India (RBI) serves as the country's central banking institution, controlling the monetary policy of the Indian rupee. Its primary constitutional and statutory functions include issuing currency notes (except one-rupee notes and coins) and regulating the flow of credit in the economy to maintain price stability while keeping in mind the objective of growth.
Established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934, and nationalized on January 1, 1949, following independence.
RBI acts as the banker to the central and state governments.
It manages the country's foreign exchange reserves under the Foreign Exchange Management Act (FEMA), 1999.
It operates the monetary policy framework, targeting inflation through instruments like Repo Rate and Reverse Repo Rate.
Option A is incorrect because foreign trade management and policy formulation are handled by the Ministry of Commerce and Industry.
Option C is incorrect because income tax collection is administered by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance.
Option D is incorrect because state budgets are prepared and managed by respective state governments and their finance departments.
B is correct тАФ Issuing currency and regulating credit are the primary statutory functions of the Reserve Bank of India.
In Indian Economy questions for RRB JE and SSC exams, frequently review the difference between fiscal policy (managed by the Ministry of Finance) and monetary policy (managed by the RBI).
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