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Questions and Answers
What is the primary role of the Reserve Bank of India in the government bond market?
What is the primary role of the Reserve Bank of India in the government bond market?
- To conduct foreign exchange operations
- To issue currency notes
- To manage the debt management functions for the central government (correct)
- To regulate public sector units
Which act mandates the Reserve Bank of India to manage the Central Government's public debt?
Which act mandates the Reserve Bank of India to manage the Central Government's public debt?
- The Reserve Bank of India Act, 1934 (correct)
- The Government Securities Act, 2006
- The Securities and Exchange Board of India Act, 1992
- The Indian Financial Code, 2017
In addition to managing public debt, what other significant mandate does the Reserve Bank of India have?
In addition to managing public debt, what other significant mandate does the Reserve Bank of India have?
- To supervise state-owned banks
- To control inflation directly
- To handle the monetary policy (correct)
- To audit financial institutions
How has the Government Securities Act, 2006 impacted the Reserve Bank of India's role?
How has the Government Securities Act, 2006 impacted the Reserve Bank of India's role?
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What dual role does the Reserve Bank of India fulfill in relation to the government?
What dual role does the Reserve Bank of India fulfill in relation to the government?
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Study Notes
Reserve Bank of India (RBI) Overview
- The Reserve Bank of India serves as the primary regulator of the Indian government bond market, establishing its crucial role by statute and design.
- As the primary banker to the Government, the RBI oversees the management of debt for the central government, ensuring proper handling of public financial obligations.
Functions of RBI
- The RBI holds the mandate to implement and manage the monetary policy of India, influencing economic conditions through interest rates and liquidity mechanisms.
- It is legally compelled to manage the Central Government’s public debt under the RBI Act of 1934, which outlines its responsibilities and powers.
Legislative Support
- The Government Securities Act of 2006 bolsters the RBI's role in debt management, providing a framework for the issuance and trading of government securities, enhancing market stability.
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