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Methods for Note issue in India, Indian Financial system Video Lecture | Indian Financial System - B Com

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FAQs on Methods for Note issue in India, Indian Financial system Video Lecture - Indian Financial System - B Com

1. What are the methods for note issue in India?
Ans. The Reserve Bank of India (RBI) is responsible for the note issue in India. The RBI follows two methods for note issue: the Minimum Reserve System and the Proportional Reserve System. Under the Minimum Reserve System, the RBI holds a minimum reserve of gold and foreign securities to issue currency notes. Under the Proportional Reserve System, the RBI holds a certain percentage of gold and foreign securities in relation to the total value of notes issued.
2. How does the Indian financial system regulate note issue?
Ans. The Indian financial system regulates note issue through the Reserve Bank of India (RBI). The RBI is authorized to issue and regulate currency notes in India. It formulates and implements monetary policies to control the supply of money and credit in the economy. The RBI also ensures the stability of the financial system and monitors the circulation of currency notes to maintain price stability.
3. What is the role of the Reserve Bank of India (RBI) in note issue?
Ans. The Reserve Bank of India (RBI) plays a crucial role in note issue in India. It is the sole authority responsible for issuing currency notes and coins in the country. The RBI formulates and implements monetary policies to control the supply of money and credit. It manages the circulation of currency notes, ensures their authenticity, and monitors their distribution across different regions of the country.
4. How does the Minimum Reserve System work for note issue in India?
Ans. The Minimum Reserve System is a method followed by the Reserve Bank of India (RBI) for note issue. Under this system, the RBI is required to maintain a minimum reserve of gold and foreign securities to issue currency notes. The value of the minimum reserve is determined by the RBI based on the monetary requirements of the economy. The RBI can issue currency notes up to the extent of the value of the minimum reserve held.
5. What is the Proportional Reserve System for note issue in India?
Ans. The Proportional Reserve System is another method used by the Reserve Bank of India (RBI) for note issue. Under this system, the RBI holds a certain percentage of gold and foreign securities in proportion to the total value of notes issued. The proportion is determined by the RBI based on the monetary requirements and economic conditions. This system allows the RBI to control the supply of money in the economy while maintaining the stability of the financial system.
39 videos|39 docs|14 tests
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