Reserve Bank of India Act Quiz

The Reserve Bank of India Act, 1934, aimed at establishing a central bank to manage India's currency and credit system. It aimed to secure monetary stability and ensure a framework for a complex economy, with price stability as its primary objective while supporting growth.

The Reserve Bank of India Act, 1934, was later amended by the Finance Act of 2016. These amendments updated the preamble of the Act, showcasing the evolution of India's monetary policy framework.

The Reserve Bank of India (RBI) was established by the Reserve Bank of India Act, 1934. Its key responsibilities include regulating the issuance of banknotes, maintaining monetary stability, and promoting economic growth.

Monetary stability refers to a stable and controlled value of a country's currency, aiming for consistent price levels and preventing rapid inflation or deflation.

The objective of the monetary policy is to maintain price stability, ensuring that the value of the currency remains relatively stable. Keeping prices steady avoids rapid inflation or deflation, which can harm economic activity.

This refers to a comprehensive set of policies and strategies used to manage the money supply and credit conditions in a country. The objective is to achieve stable economic growth and control inflation.

The monetary policy framework of India is overseen and implemented by the Reserve Bank of India (RBI), acting as a central bank with a mandate to manage the country's currency and credit system.

A bank included in the Second Schedule of the Banking Regulation Act, 1949.

A bank established under the Regional Rural Banks Act, 1976, responsible for promoting rural development.

The State Bank of India, established under the State Bank of India Act, 1955.

The Small Industries Development Bank of India, established under the Small Industries Development Bank of India Act, 1989.

A State Financial Corporation established under the State Financial Corporations Act, 1951, providing financial assistance to industries in a state.

The Unit Trust of India, established under the Unit Trust of India Act, 1963, managing mutual funds.

These terms are defined in the National Bank for Agriculture and Rural Development Act, 1981. They pertain to agricultural practices, cooperatives, and rural development.

These terms are defined in Part V of the Banking Regulation Act, 1949. They relate to cooperative banking and its structure.

The Governor and Deputy Governor of the Reserve Bank of India (RBI) serve a term not exceeding five years, as determined by the Central Government during their appointment. They are eligible for reappointment.

Directors nominated under clause (c) of sub-section (1) of the Reserve Bank of India Act hold office for four years and are eligible for reappointment. However, they cannot serve more than two terms, which equates to a maximum of eight years, whether consecutive or intermittent.

Directors nominated under clause (d) of sub-section (1) of the Reserve Bank of India Act hold office at the pleasure of the Central Government. This means their tenure is subject to the Central Government's discretion and can be ended at any time.

A Local Board is formed for each of the four areas specified in the First Schedule of the Reserve Bank of India Act. The Board consists of five members appointed by the Central Government, representing territorial and economic interests, as well as co-operative and indigenous banks.

Members of the Local Board elect one of their own as the chairman. This person represents the Board and leads their actions.

Each member of a Local Board serves a term of four years and is eligible for reappointment. However, like Directors under clause (c), they cannot serve more than two terms, totalling a maximum of eight years, either continuously or intermittently.

The existence of a vacancy or defect in the constitution of the Board does not invalidate any actions taken by it. The Board's actions are not challenged merely due to such irregularities.

Retiring Directors of the Reserve Bank of India are eligible for re-nomination to the Board. This allows for the continuation of experience and expertise within the institution.

A borrowing institution must demonstrate that it has made loans in foreign currencies for financing international trade or importing capital goods, and the total amount of these loans must not be less than the outstanding loans taken from the Bank.

The Bank is allowed to open accounts in branches outside India, form agency agreements with foreign banks, and invest in international financial institutions with the approval of the Central Board.

The Bank can participate in arrangements for clearing and settling payments related to India's external trade with other countries, even joining international organizations to facilitate these payments.

The Bank is allowed to borrow money for short-term needs, not exceeding one month. These loans can be obtained from scheduled banks within India and principal currency authorities in other countries.

The Bank can invest in the shares and securities of international and regional financial institutions or foreign institutions, provided the Central Board approves these investments.

A Director can officially leave their position by submitting a resignation letter to the Central Government.

If a Local Board member wants to resign, they submit their resignation to the Central Board.

If the Governor or a Deputy Governor is unable to perform their duties due to illness or absence, the Central Government can appoint a temporary replacement.

The Central Board nominates someone to fill a casual vacancy on a Local Board. This nominated person is usually recommended by other Local Board members.

When a Director position becomes vacant for reasons not covered by the temporary replacement rule, the Central Government fills the position.

A person appointed to fill a casual vacancy holds the position only for the remaining period of the previous holder's term.

The Central Board meets at least six times a year, ensuring regular discussions and decisions.

The Central Board meetings are designed to happen at least once in each quarter of the year, ensuring regular engagement and response to events.

The Reserve Bank of India (RBI) may not engage in commercial activities or have a direct stake in businesses, except when acquiring interests as part of recovering debts.

The RBI can acquire interests in businesses only when it's necessary to recover outstanding debts, and these interests must be disposed of as soon as possible.

The RBI has limitations on lending and loan activities, including prohibitions on lending against immovable property and accepting bills payable other than on demand.

The RBI is obligated to handle government transactions, including receiving funds, making payments, and managing the public debt.

The RBI has the right to conduct government business within India, including managing the public debt, accepting deposits, and making payments.