Tag: instruments of monetary policy and the reserve bank of india

Questions Related to instruments of monetary policy and the reserve bank of india

Bank rate is _______.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. the interest rate at which a central bank provides loans to other banks.

  2. the rate at which the bank discounts the bills and other instruments of other commercial banks.

  3. (A and (B)

  4. none of above

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Correct Option: A

In the Monetary Policy announced for the year 2006-07 the following announcements have been made- Bank Rate, Repo Rate, Reverse Repo Rate and Cash Reserve Ratio have been kept unchanged at their present levels of 6 per cent, 6.5 per cent, 5.5 per cent and 5 per cent respectively. These have been kept unchanged as liquidity pressure seen during the last 4 months of 2005-06 have eased off considerably. In the given paragraph it is stated that Bank Rate and Cash Reserve Ratio (CRR) have been kept unchanged.
What is Bank Rate?

instruments of monetary policy and the reserve bank of india money and banking economics

  1. The rate of interest charged by public sector banks from the general public.

  2. The rate of interest on housing loans.

  3. The rate of interest on educational loan.

  4. The rate at which the RBI discounts the bills of commercial banks.

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Correct Option: D

Who is the custodian of national reserves of international currency?

instruments of monetary policy and the reserve bank of india money and banking economics

  1. SBI

  2. IDBI

  3. RBI

  4. ICICI

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Correct Option: C

Who is the custodian of monetary reserves in India?

instruments of monetary policy and the reserve bank of india money and banking economics

  1. SBI

  2. SIDBI

  3. NABARD

  4. RBI

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Correct Option: D

Rate at which Reserve Bank of India gives loans to commercial banks is called ___________.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. credit rate

  2. loan rate

  3. bank rate

  4. discount rate

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Correct Option: C

Who has been appointed the first-ever Chief Financial Officer (CFO) of the Reserve Bank of India (RBI)?

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Ashoke Sen

  2. Sudha Balakrishnan

  3. Jayant Narlikar

  4. E.C. George Sudarshan

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Correct Option: B
Explanation:

Sudha Balakrishnan, the Vice-President of National Securities Depository Ltd (NSDL), has been appointed the first-ever Chief Financial Officer (CFO) of the Reserve Bank of India (RBI). She will hold the rank of executive director and will have a 3-year term. The CFO will be responsible for reporting of financial information of the central bank, establishing accounting policies and ensuring compliance with regulations.


 The CFO will also be entrusted with communicating RBIs expected and actual financial performance and overseeing its budget processes. As CFO, Balakrishnan will also be in charge of the dividend RBI pays to the government, which is crucial in the final budgetary calculations. Under the RBI Act, 1934, the central bank is required to pay the government its surplus after making provisions for bad and doubtful debts, depreciation in assets and, contribution to staff and superannuation fund among others. RBI follows a July to June financial year.

________ heads and conducts the affairs of RBI.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Central Board

  2. Local board

  3. Regional board

  4. All of the above

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Correct Option: A

Which of the following rates decided by the RBI is called ''Policy Rate''?

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Lending Rate

  2. Cash Reserve Ratio

  3. Bank Rate

  4. Deposit Rate

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Correct Option: C

Which of the following is/are the benefit/s of the marginal cost of fund based lending rate (MCLR)? Use the code given below to select your answer:
1. Better transmission of the RBI's policy rates into the banks' lending rates.
2. Enhanced competition among the banks. 

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 and 2

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Correct Option: C

Select the correct statements related to the monetary policy announced by the RBI, using the code:
1. LAF includes repo, term repo and reserve repo.
2. RBI always keeps marginal standing facility rate higher than the repo rate.

instruments of monetary policy and the reserve bank of india money and banking economics

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2

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Correct Option: C
Explanation:

Liquidity Adjustment Facility includes RBI's repo and reverse repo operations (thus it includes the term repo operation also). Being a penal rate the marginal standing facility rate has to be higher than that of the repo rate.