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Q5 (CAPF/2009) Economy › Money, Banking & Inflation › Central banking functions Answer Verified

Which one of the following is not a function of Reserve Bank of India ?

Result
Your answer: —  Â·  Correct: C
Explanation

The Reserve Bank of India (RBI) performs several core central banking functions, including acting as the banker to the government by managing its accounts and public debt [t1, t4]. It is also the custodian of the nation's foreign exchange reserves, managing foreign currency assets and gold to maintain exchange rate stability [c1, t4]. Furthermore, the RBI regulates credit and money supply in the country to ensure monetary stability [t2, t6]. However, the RBI does not issue one-rupee notes or coins. While the RBI is the sole authority for issuing bank notes of higher denominations, the one-rupee note and all coins are minted and issued by the Government of India (Ministry of Finance) [c2, c4, t3]. The RBI's role regarding these specific denominations is limited to their distribution and circulation through its currency chests [c3, c4].

Sources

  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 4. Management of Foreign Exchange Reserves > p. 68
  2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > Eunctions of RBI > p. 162
  3. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 9. Issuer of Currency > p. 70
  4. [4] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.10 Money Supply > p. 53
  5. [6] https://www.rbi.org.in/commonman/english/Scripts/Organisation.aspx
  6. [7] https://matsuniversity.ac.in/data1/study_materials/mats_school_of_law/RBI%20Act%20Notes%20(1).pdf
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