Q. With reference to the functions of the Reserve Bank of India (RBI), consider the following statements:
1.It is the ‘Banker to the Government’ for the Central Government only, as State Governments are required to manage their own public debt and accounts.
2.It acts as the custodian of the foreign exchange reserves and manages the exchange rate in order to maintain the external value of the Rupee.
Which of the statements given above is/are correct?
Answer: B
Notes:
Explanation:
Statement 1: Incorrect. The RBI is the Banker to both the Central Government and the State Governments. It transacts the general banking business of the Central and State Governments and manages their public debt.
Statement 2: Correct. Under the Foreign Exchange Management Act (FEMA), the RBI is responsible for managing the country’s foreign exchange reserves and ensuring the orderly development of the foreign exchange market to maintain the external value of the Rupee.
