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As a ‘Banker to the Government’, the RBI undertakes which of the following functions?
1. Undertakes transactions of the Central and all the state governments in India.
2. Provides short-term credit to the Central and the state governments to bridge temporary mismatches in cash flows.
3. Prints money to finance the fiscal deficit.
4. Manages the public debt of the Central Government.
Select the correct answer using the code given below:
  • a)
    1 and 2 only
  • b)
    2 and 4 only
  • c)
    1 and 4 only
  • d)
    1, 2, 3 and 4
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
As a ‘Banker to the Government’, the RBI undertakes which ...
  • As per the RBI Act, 1934, the RBI has the right to transact government business of the Union in India. State Government transactions are carried out by the RBI in terms of the agreement entered into with the State Governments under the Act. As of now, such agreements exist between the RBI and all the State Governments, except the Government of Sikkim.
  • There is a provision for providing short- term credit up to 3 months to the Central Government, state governments and the UTs in the form of the Ways and Means Advances (WMA) to bridge temporary mismatches in cash flows, as laid down in the RBI Act, 1934. Direct monetization of deficit refers to a scenario where a central bank prints currency to accommodate massive fiscal deficit of the government. With the enactment of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, it was totally barred.
  • The RBI manages public debt on behalf of the Central and the State Governments. It involves issue of new rupee loans, payment of interest and repayment of these loans and other operational matters, such as debt certificates and their registration.
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As a ‘Banker to the Government’, the RBI undertakes which of the following functions?1. Undertakes transactions of the Central and all the state governments in India.2. Provides short-term credit to the Central and the state governments to bridge temporary mismatches in cash flows.3. Prints money to finance the fiscal deficit.4. Manages the public debt of the Central Government.Select the correct answer using the code given below:a)1 and 2 onlyb)2 and 4 onlyc)1 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer?
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As a ‘Banker to the Government’, the RBI undertakes which of the following functions?1. Undertakes transactions of the Central and all the state governments in India.2. Provides short-term credit to the Central and the state governments to bridge temporary mismatches in cash flows.3. Prints money to finance the fiscal deficit.4. Manages the public debt of the Central Government.Select the correct answer using the code given below:a)1 and 2 onlyb)2 and 4 onlyc)1 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about As a ‘Banker to the Government’, the RBI undertakes which of the following functions?1. Undertakes transactions of the Central and all the state governments in India.2. Provides short-term credit to the Central and the state governments to bridge temporary mismatches in cash flows.3. Prints money to finance the fiscal deficit.4. Manages the public debt of the Central Government.Select the correct answer using the code given below:a)1 and 2 onlyb)2 and 4 onlyc)1 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for As a ‘Banker to the Government’, the RBI undertakes which of the following functions?1. Undertakes transactions of the Central and all the state governments in India.2. Provides short-term credit to the Central and the state governments to bridge temporary mismatches in cash flows.3. Prints money to finance the fiscal deficit.4. Manages the public debt of the Central Government.Select the correct answer using the code given below:a)1 and 2 onlyb)2 and 4 onlyc)1 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer?.
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