📝 One-liners · 66 cards
Reserve Bank of India
Why is the RBI described as the 'lender of last resort'?
The RBI provides emergency liquidity to solvent but temporarily illiquid banks when no other source of funding is available, preventing bank runs from becoming systemic crises.
What does the Preamble of the RBI Act, 1934 state as the primary mandate of the Reserve Bank of India?
To regulate bank note issue and secure monetary stability in India.
What is the Bagehot principle that underpins the RBI's lender-of-last-resort function?
The Bagehot principle states that the central bank should lend freely against good collateral at penalty (above-market) rates to illiquid but solvent banks during a crisis.
From which date did RBI withdraw from participating in the primary market of Government securities auctions?
April 1, 2006, under FRBM Act, 2003 provisions.
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