Test: Reserve Bank of India - 2 - Banking Exams MCQ

Under the Reserve Bank of India Act, 1934, the Department of Currency Management is responsible for administering the Reserve Bank's currency management functions. Currency management is primarily concerned with the issuance of notes and coins, as well as the removal of unfit notes from circulation.

NABARD was set up with an initial capital of 100 crore. Consequent to the revision in the composition of share capital between Government of India and RBI, the paid up capital as on 31 March 2015, stood at 5000 crore with Government of India holding 4,980 crore (99.60%) and Reserve Bank of India 20.00 crore (0.40%). RBI sold its stake in NABARD to the Government of India, which now holds 99% stake. So, the contribution of Government of India and Reserve Bank of India in the capital of NABARD is in the ratio 99 : 01

Subsidiaries of RBI:

• Deposit Insurance and Credit Guarantee Corporation of India (DICGC)
• Bharatiya Reserve Bank Note Mudran Pvt. Ltd (BRBNMPL)
• Reserve Bank Information Technology Pvt. Ltd (ReBIT)
• Indian Financial Technology and Allied Services (IFTAS)
• Reserve Bank Innovation Hub (RBIH)

Open market operations (OMO) refer to a central bank's buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Securities' purchases inject money into the banking system and stimulate growth, while sales of securities do the opposite and contract the economy.

All bank deposits, such as savings, fixed, current, and recurring deposits, are insured by DICGC up to a limit of Rs. 500,000 per depositor in a bank.

"Basel II", the revised framework comprised three pillars:

1. minimum capital requirements, which sought to develop and expand the standardised rules set out in the 1988 Accord
2. supervisory review of an institution's capital adequacy and internal assessment process
3. effective use of disclosure as a lever to strengthen market discipline and encourage sound banking practices

None of the statements deals with Pillar 2.

The Bharatiya Reserve Bank Note Mudran Private Ltd. (BRBNMPL) manages 2 Presses one at Mysore in Karnataka and the other at Salboni in West Bengal.

It advises banks to lend against certain commodities. Selective credit control is used to restrict bank finance against sensitive commodities (food grains, sugar, gur, cotton textiles, raw cotton, kapas).

The IT subsidiary of the Reserve Bank of India, Reserve Bank Information Technology Pvt Ltd was established in 2016.

Prime lending rate is the interest rate used by a bank which is decided by the concerned bank. It is usually the interest rate at which banks lend to favoured customers - i.e., those with good credit. The prime interest rate, or prime lending rate, is largely determined by the federal funds rate, which is the overnight rate that banks use to lend to one another. The prime rate is also important for individual borrowers, as the prime rate directly affects the lending rates available for a mortgage, small business loan or personal loan.