Test: Reserve Bank of India - 1 - Banking Exams MCQ

The Reserve Bank of India was set up based on the recommendations of the Hilton Young Commission.

RBI's open market operation transactions are carried out with a view to regulate liquidity in the economy, prices of essential commodities and inflation. Open market operations refer to sale and purchase of securities in the open market.

At the time of establishment, the authorized capital of the Reserve Bank of India was Rs. 5 crores.

A liquidity adjustment facility (LAF) is a tool used in monetary policy, primarily by the Reserve Bank of India (RBI), that allows banks to borrow money through repurchase agreements (repos) or for banks to make loans to the RBI through reverse repo agreements. This arrangement manages liquidity pressures and assures basic stability in the financial markets. In the United States, the Federal Reserve transacts repos and reverse repos under its open market operations.

Sir Osborne Smith was the first Governor of the Reserve Bank.

Banking Regulation Act gives the Reserve Bank of India (RBI) the power to license banks, have regulation over shareholding and voting rights of shareholders, supervise the appointment of the boards and management, regulate the operations of banks, lay down instructions for audits, control moratorium, mergers and liquidation, issue directives in the interests of public good and on banking policy, and impose penalties.

The first Indian Governor of the Bank was Chintaman Dwarkanath Deshmukh, a member of the Indian Civil Service. When he was appointed Government liaison officer in 1939, he began his affiliation with the Bank. He went on to become Secretary of the Bank and then Deputy Governor in 1941.

Under Section 22 of the Reserve Bank of India Act, RBI has the sole right to issue currency notes of various denominations, except one rupee notes. The one rupee note is issued by the Ministry of Finance and bears the signature of the Finance Secretary, while other notes bear the signature of the RBI Governor.

The Royal Commission on Indian Currency and Finance, popularly known as the Hilton-Young Commission, recommended the establishment of the Reserve Bank of India.

A mutual fund is a trust made up of money collected from public or investors through the sale of units for investment in securities such as stocks, bonds, and money market instruments. Mutual Funds in India are governed by the Securities Exchange Board of India (Mutual Fund) Regulations 1996 with the exception of Unit Trust of India (UTI) as it was created by the UTI Act passed by the Parliament of India. All mutual funds must be registered with SEBI.
In 1996, SEBI formulated the Mutual Fund Regulation.