The primary objective of monetary policy is to maintain ___ while supporting economic growth in the economy.

Price stability

True or False: Non-Banking Financial Companies (NBFCs) can engage in agricultural activities as their principal business.

False; NBFCs cannot engage in agricultural activities as their principal business.

Fill in the blank: The Reserve Bank of India was established on ___ under the provisions of the RBI Act, ___.

April 1, 1935; 1934

What is the function of the Cash Reserve Ratio (CRR) in the banking system?

The CRR is the percentage of a bank's total deposits that must be maintained with the RBI in cash form to ensure liquidity and control inflation.

True or False: The Repo Rate is the interest rate at which the RBI pays to banks for short-term loans.

False; The Repo Rate is the interest rate at which the RBI lends money to banks.

Fill in the blank: The Basel III provisions emphasize the quality of capital by requiring banks to maintain a minimum ___ of ___ percent.

Capital Adequacy Ratio (CAR); 9

What was the impact of the Banking Nationalisation Act of 1969 on the banking sector in India?

The act led to the complete nationalization of 14 major commercial banks, aiming to align the banking sector with national economic goals and increase government control over the financial system.

True or False: The Statutory Liquidity Ratio (SLR) requires banks to maintain a portion of their net demand and time liabilities in cash.

False; The SLR requires banks to maintain a portion of their net demand and time liabilities in liquid assets, not cash.

Fill in the blank: The Reserve Bank of India manages the ___ to stabilize the exchange rate of the Indian Rupee.

Foreign Exchange Management Act (FEMA)

Fill in the blank: The RBI introduced the ____________ to promote financial inclusion and direct interaction between small lenders and borrowers.

Peer to Peer (P2P) lending framework

What is the primary purpose of the Asset Reconstruction Companies (ARCs) in the Indian banking sector?

ARCs are established to manage and resolve the burden of Non-Performing Assets (NPAs) by purchasing bad loans from banks and attempting to recover them.

True or False: The Marginal Cost of Funds-based Lending Rate (MCLR) was introduced to ensure that banks could lend at rates lower than the Base Rate.

False; MCLR was introduced to improve the transparency and responsiveness of lending rates to changes in the monetary policy.

What is the significance of the liquidity adjustment facility (LAF) in the Indian banking system?

LAF allows the RBI to adjust liquidity in the banking system by lending to or borrowing from banks at predetermined rates, ensuring stability in the money market.

Fill in the blank: Under the ____________ scheme, banks can borrow overnight funds from the RBI at an interest rate higher than the repo rate.

Marginal Standing Facility (MSF)

True or False: Non-Banking Financial Companies (NBFCs) can accept deposits and provide loans but cannot engage in agricultural activities as their principal business.

True

The Cash Reserve Ratio (CRR) is maintained by banks with the Reserve Bank of India and can be set between ___ and ___ percent.

3 and 15

What major role does the Reserve Bank of India play in the financial system?

It acts as the regulator and supervisor of the financial system, managing monetary policy, currency issuance, and foreign exchange.