CENTRAL BANKING INDIAN SPECIFIC ISSUES
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Central Banking (Elective) — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary mandate of the Reserve Bank of India as the central bank?
The RBI's primary mandate is to maintain monetary stability, manage currency, oversee the credit system, and ensure the development of the financial system in India.
What is the Monetary Policy Framework Agreement signed between the Government of India and the RBI?
A 2015 agreement fixing CPI inflation target at 4% with 2% band.
Which Act established the Reserve Bank of India and in which year?
The Reserve Bank of India was established under the Reserve Bank of India Act, 1934, and commenced operations on April 1, 1935.
What is the role of the Monetary Policy Committee in setting policy rates in India?
Six-member committee decides repo rate by majority vote every two months.
What is the significance of the RBI being a 'lender of last resort'?
As lender of last resort, the RBI provides emergency liquidity to banks facing a crisis to prevent systemic collapse, ensuring financial stability in the banking system.
What is the purpose of the Standing Deposit Facility introduced by RBI in April 2022?
It absorbs excess liquidity without requiring government securities as collateral.
What is the Monetary Policy Committee (MPC) and who constitutes it?
The MPC is a six-member statutory body responsible for setting the benchmark policy repo rate; it consists of three RBI officials (including the Governor as Chair) and three external members appointed by the Government of India.
What is the difference between the repo rate and the reverse repo rate in India?
Repo is rate at which RBI lends to banks; reverse repo is rate at which RBI borrows.
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