Reserve Bank of India Act Quiz

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Questions and Answers

What is the primary objective of the monetary policy as stated in the Act?

To maintain price stability (correct)

To maximize employment rates

To control foreign investments

To promote economic inequality

Which of the following statements about the Reserve Bank of India Act is accurate?

It was first enacted in 1934 to stabilize the currency and credit system. (correct)

It prohibits the issuing of bank notes in India.

It primarily aims to generate profit for the government.

It was enacted to ensure the dominance of foreign banks in India.

Which of the following territories was extended jurisdiction under the Reserve Bank of India Act after its original enactment?

Nepal

Goa, Daman, and Diu (correct)

Bangladesh

Maldives

What key function is specified for the Reserve Bank of India in the preamble?

To operate the currency and credit system Signup and view all the answers

The Act was supplemented by which other significant legislation?

The Finance Act, 1964 Signup and view all the answers

What adjustment was made to the Preamble of the Reserve Bank of India Act in 2016?

Substitution of paragraphs relating to monetary policy objectives Signup and view all the answers

How does the Reserve Bank of India contribute to price stability according to its framework?

Through a modern monetary policy framework Signup and view all the answers

Which of the following best describes the nature of the Reserve Bank of India as stated in the Act?

A regulatory and monetary authority Signup and view all the answers

What is the maximum term duration for a Governor or Deputy Governor as per the stated provisions?

Five years Signup and view all the answers

How many terms can a Director nominated under clause (c) of sub-section (1) serve?

Two terms Signup and view all the answers

In the context of Local Boards, how many members are required to be appointed by the Central Government?

Five members Signup and view all the answers

What is the maximum cumulative period a Director can serve if appointed intermittently?

Eight years Signup and view all the answers

What provision is stated regarding acts or proceedings of the Board?

They cannot be questioned on the existence of a vacancy. Signup and view all the answers

Which entity has the authority to determine the term of office for a Director nominated under clause (d) of sub-section (1)?

The Central Government Signup and view all the answers

What is the primary definition of 'scheduled bank' as mentioned?

A bank included in the Second Schedule Signup and view all the answers

What is required of the Local Board members in relation to their representation?

They should represent both territorial and economic interests. Signup and view all the answers

According to the National Bank for Agriculture and Rural Development Act, what does 'agricultural operations' include?

Various activities related to agriculture, including marketing of crops Signup and view all the answers

What happens to a retiring Director in terms of future appointments?

They are eligible for re-nomination. Signup and view all the answers

What does 'Small Industries Bank' refer to?

The Small Industries Development Bank of India Signup and view all the answers

Which Act established the 'State Bank'?

State Bank of India Act, 1955 Signup and view all the answers

What is the meaning of 'Sponsor Bank'?

A bank defined under the Regional Rural Banks Act, 1976 Signup and view all the answers

Which institution is defined as 'Unit Trust'?

Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963 Signup and view all the answers

Which of the following phrases relates to primary cooperative financial entities?

Organizations defined in Part V of the Banking Regulation Act, 1949 Signup and view all the answers

What significant change was made by Act 62 in 1948?

Omission of the word 'silver' Signup and view all the answers

Which activity is explicitly prohibited for the Bank under the stated restrictions?

Engaging in trade for profit Signup and view all the answers

Under which condition can the Bank own immovable property?

Only for its business premises and residences Signup and view all the answers

What is one of the obligations of the Bank related to government business?

To accept money for the account of the Central Government Signup and view all the answers

Which activity is the Bank prohibited from performing regarding loans and advances?

Making loans on the security of shares Signup and view all the answers

Which of the following statements about the Bank's interest in commercial undertakings is true?

The Bank may acquire interests in commercial undertakings but must dispose of them promptly. Signup and view all the answers

What happens when a Director resigns their office?

The resignation is submitted to the Central Government and the office becomes vacant upon acceptance. Signup and view all the answers

Who may appoint an officiating person when the Governor or Deputy Governor is incapable of executing their duties?

The Central Government after considering recommendations from the Central Board. Signup and view all the answers

What is required for the Central Board to nominate a person to fill a casual vacancy in the Local Board?

A recommendation from the other members of the Local Board. Signup and view all the answers

How should the term of a person nominated to fill a casual vacancy be determined?

They serve only the remainder of the predecessor's term. Signup and view all the answers

How frequently must meetings of the Central Board be convened?

At least six times in a year and once in each quarter. Signup and view all the answers

What action occurs if a casual vacancy occurs in the office of a Director?

The Central Government fills the vacancy. Signup and view all the answers

In what circumstance can the Central Government appoint someone to officiate for the Governor or Deputy Governor?

If the Governor is rendered incapable or is absent on leave. Signup and view all the answers

What happens to the office of a member of a Local Board upon resignation?

The office becomes vacant upon acceptance of the resignation by the Central Board. Signup and view all the answers

What is a prerequisite for a bank or financial institution to borrow money against promissory notes?

It must make loans and advances in foreign currencies for approved international trade. Signup and view all the answers

Which of the following is true regarding the opening of accounts with offices outside India?

Approval must be granted by the Central Board for investment in foreign institutions. Signup and view all the answers

What is the maximum duration for which the Bank can borrow money for its business purposes?

One month. Signup and view all the answers

What type of currency arrangements can the Bank participate in for external trade?

Arrangements approved by the Central Government with international clearing unions. Signup and view all the answers

From which entities is the Bank prohibited from borrowing money?

Any person in India not considered a scheduled bank. Signup and view all the answers

What must the Bank do to secure money borrowed for its business?

Give security for the money borrowed. Signup and view all the answers

What condition must be fulfilled regarding outstanding loans when borrowing from the Bank?

Outstanding loans should not be less than the amount borrowed from the Bank. Signup and view all the answers

Which of the following actions is NOT permitted for the Bank regarding foreign financial institutions?

Making loans to foreign entities without any oversight. Signup and view all the answers

Which option describes a key function the Bank can undertake related to foreign exchanges?

Becoming a member of international clearing unions with governmental approval. Signup and view all the answers

What is a stipulation for the Bank regarding its borrowing from banks outside India?

Funds should only be borrowed from the central banks of other countries. Signup and view all the answers

Study Notes

Reserve Bank of India Act, 1934

Amendment: Amended by the Finance Act, 2022
Disclaimer: Reserve Bank of India not responsible for any inadvertent mistakes in the document. Any reliance on this document is at the reader's own risk. Readers should refer to the Gazette copy for discrepancies. Suggestions for correction are welcome.
Table of Contents: Covers preliminary chapters, incorporation, capital, management, business, central banking functions, and various other provisions.
Chapter I-Preliminary: Includes short title, extent, and commencement, as well as definitions.
Chapter II-Incorporation, Capital, Management and Business: Details establishment, incorporation, capital, management, composition of the Central Board, Local Boards and their functions, disqualifications of directors, meeting schedules, business transactions.
Chapter III-Central Banking Functions: Outlines obligations to transact Government business, issuance of bank notes, issue department, denominations of notes, and recovery of lost notes.
Chapter III-A: Collection and furnishing of credit information
Chapter III-B: Provisions relating to non-banking institutions receiving deposits and financial institutions.
Chapter III-C: Prohibition of acceptance of deposits by unincorporated bodies
Chapter III-D: Regulation of transactions in derivatives, money market instruments, securities etc
Chapter III-E: Joint Mechanism
Chapter III-F: Monetary Policy
Chapter IV-General Provisions: Discusses contributions by Central Government, allocation of surplus profits, and exemption from income tax.
Chapter V-Penalties: Outlines penalties for various offenses.
List of Amending Acts, Ordinances, Regulations and Adaptation Orders: Includes specific acts and amendments over time.

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Description

Test your knowledge on the Reserve Bank of India Act and its provisions. This quiz covers key objectives, functions, and amendments related to the Act. Dive into the specifics of monetary policy and the role of the Reserve Bank in India's financial framework.