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Q49 (IAS/2010) Economy › Money, Banking & Inflation › Central banking functions Answer Verified

In India, the interest rate on savings accounts in all the nationalized commercial banks is fixed by

Result
Your answer: —  ·  Correct: D
Explanation

The Reserve Bank of India (RBI) regulates and prescribes the interest rate on savings bank accounts; for example, RBI’s notification fixed the savings account rate at 4% per annum (effective May 3, 2011) indicating that this function is carried out by the central bank rather than the Ministry, Finance Commission or IBA [1]. While most deposit and lending rates have been largely deregulated and are determined by banks, the central bank continues to regulate interest on certain categories of deposits and related prudential norms, showing that RBI — not the options listed — is the relevant authority for savings-bank interest regulation [2]. Therefore, “None of the above” is correct.

Sources

  1. [1] https://www.rbi.org.in/commonman/english/scripts/Notification.aspx?Id=895
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > Commercial Banks > p. 66
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