RBI MCQ Questions and Answers
11. The term of appointment of RBI governor is?
- A) 2 years
- B) 3 years
- C) 4 years
- D) 5 years
B) 3 years
Explanation: The term of appointment for the RBI Governor is typically three years, which can be extended by the government.
12. Who is the chairman of the central board?
- A) Finance Minister of India
- B) Governor of RBI
- C) President of India
- D) Deputy Governor of RBI
B) Governor of RBI
Explanation: The Governor of the Reserve Bank of India serves as the Chairman of the Central Board of Directors.
13. Which department of the RBI is responsible for issuing currency notes?
- A) Banking Regulation Department
- B) Currency Management Department
- C) Issue Department
- D) Economic Policy Department
C) Issue Department
Explanation: The Issue Department of the Reserve Bank of India is responsible for the issuance and management of currency notes.
14. In which year did the RBI adopt the minimum reserves system of note issue?
- A) 1956
- B) 1949
- C) 1962
- D) 1971
A) 1956
Explanation: The Reserve Bank of India adopted the Minimum Reserve System for the issuance of currency notes in 1956, requiring it to maintain a minimum reserve of gold and foreign exchange.
15. One rupee coins and notes are issued in India by __________.
- A) Reserve Bank of India
- B) Ministry of Finance
- C) State Bank of India
- D) Securities and Exchange Board of India
B) Ministry of Finance
Explanation: In India, one rupee coins and notes are issued by the Ministry of Finance, while other currency denominations are issued by the Reserve Bank of India.
16. What are the principles of issuing notes?
- A) Proportional Reserve System
- B) Minimum Reserve System
- C) Uniformity, Elasticity, and Security
- D) Full Reserve System
C) Uniformity, Elasticity, and Security
Explanation: The principles of issuing notes include uniformity (ensuring that all notes are consistent in design and denomination), elasticity (the ability to adjust the supply of currency as needed), and security (incorporating features to prevent counterfeiting and ensure the integrity of the currency). These principles ensure that the currency remains trustworthy, adaptable to economic conditions, and difficult to counterfeit.
17. The RBI was originally set up as a __________.
- A) Government-owned institution
- B) Cooperative bank
- C) Private bank
- D) Regional rural bank
C) Private bank
Explanation: The Reserve Bank of India was originally established as a privately owned bank in 1935 but was nationalized in 1949.
18. Which principle is followed to constitute various departments in RBI?
- A) Regional principle
- B) Hierarchical principle
- C) Functional specialization principle
- D) Territorial principle
C) Functional specialization principle
Explanation: The Functional Specialization Principle in the Reserve Bank of India (RBI) means organizing different departments based on their specific roles or areas of expertise. For example, there are separate departments for banking regulation, managing currency, making monetary policies, overseeing financial markets, and conducting economic research. This setup ensures that each department focuses on its specialized tasks, leading to efficient management and effective handling of various aspects of central banking.
19. Credit authorization scheme was introduced by RBI in ___________.
- A) 1970
- B) 1962
- C) 1965
- D) 1985
C) 1965
Explanation: The Credit Authorization Scheme (CAS) was started by the Reserve Bank of India (RBI) in 1965 and ended in 1989. It required banks to get RBI approval before giving loans of Rs. 1 crore or more to a single borrower. The limit was later raised to Rs. 6 crores by 1986. This was to control lending and promote responsible borrowing. The scheme aimed to ensure that banks were cautious while lending large amounts and to prevent excessive risk-taking in the banking sector.
20. Repo rate is the rate at which RBI lends to scheduled commercial banks for ________.
- A) Long-term loans
- B) Short-term loans
- C) Housing loans
- D) Agricultural loans
B) Short-term loans
Explanation: The Repo rate is the rate at which the Reserve Bank of India lends short-term funds to scheduled commercial banks to maintain liquidity in the banking system.