What is RBI's contingency reserve and Asset Development Reserve?

Q.  Which of the following statements is/are correct?

1.RBI maintains a contingency reserve for meeting unexpected and unforeseen contingencies, including depreciation in the value of securities, exchange guarantees and risks arising out of monetary or exchange rate policy operations.
2. RBI also maintains Asset Development Reserve, created in 1997-98, to meet the internal capital expenditure and make investments in its subsidiaries and associate institutions.
- Published on 08 Sep 15

a. Only 1
b. Only 2
c. Both
d. None

ANSWER: Both
 
The contingency reserve and the asset development reserve together constituted 10.1 per cent of the RBI’s total assets as on June 30, 2013 — still short of the 12 percent target the central bank wanted to achieve.

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