Podcast
Questions and Answers
Who is authorized to issue currency notes?
Who is authorized to issue currency notes?
What percentage of the daily balance must banks maintain with the RBI according to the Banking Regulation Act-1949?
What percentage of the daily balance must banks maintain with the RBI according to the Banking Regulation Act-1949?
What is the current Cash Reserve Ratio (CRR) set by the RBI?
What is the current Cash Reserve Ratio (CRR) set by the RBI?
What is the maximum percentage of net demand and time liabilities that banks must maintain as security with the RBI according to the Banking Regulation Act-1949?
What is the maximum percentage of net demand and time liabilities that banks must maintain as security with the RBI according to the Banking Regulation Act-1949?
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Who provides refinance facilities to all scheduled banks and acts as the lender of last resort?
Who provides refinance facilities to all scheduled banks and acts as the lender of last resort?
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At what paid up capital was the Reserve Bank of India established according to the Currency Act 1948?
At what paid up capital was the Reserve Bank of India established according to the Currency Act 1948?
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Under which recommendations was the Reserve Bank of India established?
Under which recommendations was the Reserve Bank of India established?
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When was the Central Government nationalized the RBI?
When was the Central Government nationalized the RBI?
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How many Deputy Governors does the RBI consist of?
How many Deputy Governors does the RBI consist of?
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Who was the first Governor of the RBI?
Who was the first Governor of the RBI?
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Which section of the Indian Banking Act requires every bank to keep 25% of its total deposits in cash and approved securities?
Which section of the Indian Banking Act requires every bank to keep 25% of its total deposits in cash and approved securities?
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What is the primary goal of the Reserve Bank of India's credit regulation measures?
What is the primary goal of the Reserve Bank of India's credit regulation measures?
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Under which section of the Indian Banking Act does the Reserve Bank have extensive inspection rights for banks?
Under which section of the Indian Banking Act does the Reserve Bank have extensive inspection rights for banks?
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What is the primary role of the Reserve Bank of India in relation to foreign exchange reserves?
What is the primary role of the Reserve Bank of India in relation to foreign exchange reserves?
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Study Notes
Currency Issuance and Banking Regulation
- Only the Reserve Bank of India (RBI) is authorized to issue currency notes in India.
- Banks must maintain a daily balance of 4% of their net demand and time liabilities with the RBI according to the Banking Regulation Act, 1949.
- The current Cash Reserve Ratio (CRR) set by the RBI is 4.5%.
- Banks must maintain a maximum of 25% of their net demand and time liabilities as security with the RBI per the Banking Regulation Act, 1949.
Reserve Bank of India Functions and Establishment
- The RBI provides refinance facilities to all scheduled banks and serves as the lender of last resort.
- The RBI was established with a paid-up capital of ₹20 crores under the Currency Act, 1948.
- The RBI was founded based on the recommendations of the Hilton-Young Commission, which endorsed a central bank for India.
Nationalization and Governance
- The Indian Central Government nationalized the Reserve Bank of India in January 1949.
- The RBI has four Deputy Governors who assist in its governance and operational functions.
Historical Context and Legislative Framework
- The first Governor of the RBI was James B. Taylor, serving from 1935 to 1937.
- Section 24 of the Indian Banking Act mandates that every bank must maintain 25% of its total deposits in cash and approved securities.
- The primary goal of the RBI's credit regulation measures is to ensure monetary stability and control inflation.
- Extensive inspection rights for banks are exercised by the RBI under Section 35 of the Indian Banking Act.
- The primary role of the RBI concerning foreign exchange reserves is to manage and safeguard the country’s foreign exchange and maintain external stability.
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Description
Test your knowledge about the functions of the Reserve Bank of India as per the RBI Act of 1934. Explore the roles of RBI as the issuer of currency and its responsibilities as a banker, representative, and advisor to the State Governments.
