UPSC Prelims 2001 · General Studies
Question 54: Economy and Social Development
Consider the following statements regarding Reserve Bank of India: I. It is a banker to the Central Government. II. It formulates and administers monetary policy. III. It acts as an agent of the Government in respect of India’s membership of IMF. IV. It handles the borrowing programme of Government of India. Which of these statements are correct?
AnswerThe answer is (c).
All four statements are correct. The RBI is banker to the Central Government (and to State governments), formulates and administers monetary policy, acts as the Government's agent for India's membership of the IMF, and manages the public debt and borrowing programme of the Government. Remember that it also issues currency and is the banker to banks and regulator of the banking system.
- I. The RBI is the banker to the Central Government.
- II. The RBI formulates and administers monetary policy.
- III. The RBI acts as the Government's agent in matters of the IMF membership.
- IV. The RBI manages the Government's borrowing programme.
Why each option is right or wrong
- (a) III and IV are also correct.
- (b) I is also correct.
- (c) Right: all four are correct.
- (d) I and II are also correct.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2001, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.