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CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
Page 2


CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
Introduction 
Functions of RBI 
Role of RBI 
Indian monetary policy 
Instruments of Credit controls 
Multiple Choice Questions   
Page 3


CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
Introduction 
Functions of RBI 
Role of RBI 
Indian monetary policy 
Instruments of Credit controls 
Multiple Choice Questions   
The Reserve Bank of India is the central bank of 
the country and it performs all the central banking 
functions. 
Reserve Bank of India was setup on 1
st
 April 1935 
as the shareholders bank. 
RBI was nationalized on 1
st
 January 1949. 
Page 4


CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
Introduction 
Functions of RBI 
Role of RBI 
Indian monetary policy 
Instruments of Credit controls 
Multiple Choice Questions   
The Reserve Bank of India is the central bank of 
the country and it performs all the central banking 
functions. 
Reserve Bank of India was setup on 1
st
 April 1935 
as the shareholders bank. 
RBI was nationalized on 1
st
 January 1949. 
The Executive head of the Bank is called the Governor, who is assisted by 
Deputy Governors and other executive officers. 
The General superintendence and direction has been entrusted to the Central 
Board of Directors, consisting of  the Governor, Dty. Governors, one Govt. 
Official from the Ministry of Finance and Directors nominated by the Govt. of 
India representing the Local Boards and various elements of the economy.  
Besides the Central board there are 4 Local Boards with headquarters in 
Mumbai, Kolkata, Chennai and New Delhi. 
Page 5


CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
Introduction 
Functions of RBI 
Role of RBI 
Indian monetary policy 
Instruments of Credit controls 
Multiple Choice Questions   
The Reserve Bank of India is the central bank of 
the country and it performs all the central banking 
functions. 
Reserve Bank of India was setup on 1
st
 April 1935 
as the shareholders bank. 
RBI was nationalized on 1
st
 January 1949. 
The Executive head of the Bank is called the Governor, who is assisted by 
Deputy Governors and other executive officers. 
The General superintendence and direction has been entrusted to the Central 
Board of Directors, consisting of  the Governor, Dty. Governors, one Govt. 
Official from the Ministry of Finance and Directors nominated by the Govt. of 
India representing the Local Boards and various elements of the economy.  
Besides the Central board there are 4 Local Boards with headquarters in 
Mumbai, Kolkata, Chennai and New Delhi. 
Supervision and control over Commercial Banks, 
relating to licensing and establishments, branch 
expansion, liquidity of their assets, management 
and methods of working, amalgamation, 
reconstruction and liquidation. 
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FAQs on PPT : Reserve bank of India - Economics Class 12 - Commerce

1. What is the role of the Reserve Bank of India?
Ans. The Reserve Bank of India (RBI) is the central banking institution of India and plays a crucial role in the country's monetary system. It is responsible for formulating and implementing monetary policies, issuing currency, regulating and supervising the banking sector, managing foreign exchange reserves, and promoting financial stability in the country.
2. How does the Reserve Bank of India control inflation?
Ans. The Reserve Bank of India controls inflation primarily through its monetary policy tools. It uses measures like changing the repo rate, reverse repo rate, and cash reserve ratio to influence the borrowing costs of commercial banks. By adjusting these rates, the RBI aims to control liquidity in the economy, which in turn affects consumer borrowing and spending, thus impacting inflation.
3. What is the role of the Reserve Bank of India in regulating banks?
Ans. The Reserve Bank of India acts as the regulatory authority for banks in India. It supervises and regulates the functioning of commercial banks, cooperative banks, and other financial institutions. The RBI sets guidelines and regulations for various aspects such as capital adequacy, risk management, corporate governance, and lending practices to ensure the stability and soundness of the banking sector.
4. How does the Reserve Bank of India manage foreign exchange reserves?
Ans. The Reserve Bank of India manages foreign exchange reserves to maintain the stability of the Indian rupee and facilitate international trade. It actively intervenes in the foreign exchange market by buying and selling foreign currencies to influence the exchange rate. The RBI also invests a portion of the reserves in safe and liquid assets to generate returns while ensuring the availability of adequate foreign currency reserves.
5. What measures does the Reserve Bank of India take to promote financial stability?
Ans. The Reserve Bank of India takes several measures to promote financial stability in the country. It conducts regular risk assessments of banks and financial institutions, enforces prudential regulations, and monitors systemic risks. The RBI also implements measures to enhance corporate governance, promote financial inclusion, and develop robust payment and settlement systems to ensure the overall stability and resilience of the financial sector.
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