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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 
MCQ’s 
Page 3


CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
MCQ’s 
a.Providing cheap rediscounting 
facilities to commercial banks 
b.Providing liberalised 
rediscounting facilities to 
commercial banks 
c.Giving subsidies to new banks 
d.All of the above 
Answer:d 
Page 4


CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
MCQ’s 
a.Providing cheap rediscounting 
facilities to commercial banks 
b.Providing liberalised 
rediscounting facilities to 
commercial banks 
c.Giving subsidies to new banks 
d.All of the above 
Answer:d 
a. RBI Act, 1934 
b. Banking Regulation Act, 
1949 
c. Both RBI Act 1934 and 
Banking Regulation Act 1949 
d. Banking Regulation Act, 
1960 
Answer:
C 
Page 5


CPT Section C General Economics Chapter 8 Unit 3 
The Reserve Bank of India. 
CA Shweta Poojari 
MCQ’s 
a.Providing cheap rediscounting 
facilities to commercial banks 
b.Providing liberalised 
rediscounting facilities to 
commercial banks 
c.Giving subsidies to new banks 
d.All of the above 
Answer:d 
a. RBI Act, 1934 
b. Banking Regulation Act, 
1949 
c. Both RBI Act 1934 and 
Banking Regulation Act 1949 
d. Banking Regulation Act, 
1960 
Answer:
C 
a. It can bring about compulsory 
amalgamation of weak banks 
b. It can claim for compulsory 
liquidation 
c. It can expedite winding up of 
proceedings to safeguard the interest of 
depositors 
d. All of the above 
Answer:d 
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FAQs on MCQ - Reserve Bank of India - Business Economics for CA Foundation

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 that is responsible for the issue and supply of the Indian rupee and the regulation of the Indian financial system. It plays a crucial role in maintaining price stability, controlling inflation, managing foreign exchange reserves, and ensuring the stability and efficiency of the banking system.
2. How does the Reserve Bank of India control inflation?
Ans. The Reserve Bank of India controls inflation through various monetary policy tools. It uses the repo rate, which is the rate at which it lends money to commercial banks, to influence interest rates in the economy. By increasing the repo rate, the RBI reduces the money supply, making borrowing more expensive and reducing spending, which helps control inflation. Conversely, by decreasing the repo rate, the RBI encourages borrowing and spending, stimulating economic growth.
3. What is the significance of the Reserve Bank of India's foreign exchange reserves?
Ans. The Reserve Bank of India's foreign exchange reserves are important for several reasons. Firstly, they act as a cushion to stabilize the value of the Indian rupee in the foreign exchange market. Secondly, these reserves provide a sense of confidence to investors and help maintain financial stability in the country. Lastly, they enable the RBI to intervene in the foreign exchange market to address excessive volatility or liquidity issues.
4. How does the Reserve Bank of India regulate the banking system in India?
Ans. The Reserve Bank of India regulates the banking system in India through various measures. It issues licenses to new banks, sets guidelines for their operations, and supervises their functioning to ensure compliance with prudential norms. The RBI also conducts regular inspections and audits of banks to assess their financial health and adherence to regulations. Additionally, it formulates and implements policies to promote financial inclusion, customer protection, and the stability of the banking system.
5. What is the role of the Reserve Bank of India in promoting financial inclusion?
Ans. The Reserve Bank of India plays a crucial role in promoting financial inclusion by implementing policies that aim to provide access to formal financial services to all segments of society, especially the underprivileged and rural population. It has introduced measures such as the Priority Sector Lending (PSL) target, which mandates banks to allocate a certain percentage of their lending to sectors like agriculture, micro, small, and medium enterprises, and housing for the economically weaker sections. The RBI also encourages the use of technology and digital platforms to enhance financial inclusion and improve access to banking services.
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