MCQs with answers on RBI

ANSWER: On April 1, 1935 the Reserve Bank of India, which is the central bank of this country, was established. It was originally started as a shareholders' bank with a share capital of Rs. 5 crore divided into shares of Rs. 100 each, fully paid-up. But since January, 1949 the Reserve Bank has been nationalised and it is now purely a concern of the State. The Government of India holds the entire share capital of the bank which has been acquired by payment of compensation to the shareholders.

ANSWER: a) State Bank of India

The State Bank of India works as RBI's agent at places where it has no office of its own.

ANSWER: (c) All the Above

The Reserve Bank of India, as the central bank of the country, functions as the sole bank with the right of issuing paper notes, it acts as banker to the Government, it is the banker to other bank and it regulates the flow of credit.

ANSWER: d) RBI does not regulate the flow of credit

The Reserve Bank of India, as the central bank of the country, regulates the flow of credit.

ANSWER: c) 1947

Since March, 1934 India is a member of the International Monetary Fund. It has to, therefore, maintain its rate of exchange at the level which it has declared to the IMF. The Reserve Bank takes suitable measures to maintain the value of the rupee at this declared level.

ANSWER: (c) all the above

Certain restrictions have been imposed on the Reserve Bank as it is a central bank. It is not to compete with the commercial banks. It is not allowed to pay interest on its deposits. It cannot engage directly or indirectly in trade. It cannot also acquire or advice loans against immovable property. It is also prohibited from purchasing its own shares or the shares of any other bank or any company or granting loans on such security.

ANSWER: a) April 5, 2006

The Reserve Bank of India (RBI) notified the draft regulations relating to the Credit Information Companies (Regulation) Act, 2005 on April 5, 2006. Among the major features of the regulations is the inclusion of stock brokers and telecommunication companies in the category of 'specified users' of services of credit information companies. It is expected that there will be a boost to the development of credit, based on a more reliable information base, once the regulations are finalised.

ANSWER: b) May 26, 2006

The Reserve Bank of India (RBI) published the draft guidelines for building grievance redressal mechanism within NBFCs (Non-Banking Financial Companies) on May 26, 2006. The grievance redressal mechanism would be used to resolve disputes arising out of the decisions of the lending institutions' functionaries. Guidelines have also been outlined by the RBI for putting in place the Fair Practices Codes by all NBFCs.

ANSWER: c) June 29, 2007

The Centre acquired the Reserve Bank of India's entire 59.73% equity stake in State Bank of India (SBI) at over Rs. 35,531 crore in New Delhi on June 29, 2007. It is the biggest ever cash purchase. As per the guidelines of the Securities and Exchange Board of India (SEBI), the Government picked up the entire SBI shares held by the RBI at a price of Rs. 1,130.35 a share.

ANSWER: d) Securities and Exchange Board of India (SEBI)

As per the guidelines of the Securities and Exchange Board of India (SEBI), the Government picked up the entire SBI shares held by the RBI at a price of Rs. 1,130.35 a share.

ANSWER: a) 29 June

To facilitate an ordinance published for providing the requisite statutory provisions in the State Bank of India Act, 1955, the Government appointed 29 June as the date for transfer of stake. On the same principle, the Government also acquired RBI's shareholding in National Housing Bank (NHB) and NABARD. The Reserve Bank holds a 72.5% stake in NABARD and 100% stake in NHB.