Page 57 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes 3. Besides maintaining the rate of exchange of the rupee, the Reserve Bank has to act as the
custodian of India's reserve of .......................
4. The ................ function of the RBI may be regarded as a non-monetary function.

5. The RBI acts as the lender of the last resort by providing .............. facilities to scheduled
banks.
6. The power of the RBI to call for information is also intended to give it effective control of
the ...............
7. The Reserve Bank of India has the responsibility to .............. the official rate of exchange.
8. The Reserve Bank of India acts as a bank of ..................... in settling the mutual accounts of
commercial banks
9. Under the method of .............., the RBI gives advices and suggestions to the bankers to
follow the instructions given by it
10. In India, the currencies should be exchanged only with .................. or ..................... banks.
11. ........................ means the difference between the loan value and market value of securities.
12. ..................... is the nodal agency which facilitates external trade and payment in India.

13. RBI destroys currency and coins .................. for circulation.
14. If there is no RBI branch in a certain region, some of its services can be discharged by the
......................

15. The Reserve Bank of India helps the Government - both the Union and the States to float
new ................. and to manage public ....................

4.6 Review Questions

1. What are the main supervisory functions that the Reserve Bank of India has?
2. What role is played by the RBI in order to keep the economy stable?

3. “RBI has started doing commercial banking functions also.” Discuss.
4. Do you think RBI has been able to successfully shield Indian economy from the global
recession? Support your argument with reasons.
5. “RBI has emerged as one of the strongest central banking authorities of the world.“
Comment.
6. Discuss about the relationship between the commercial bank and RBI. How does RBI
regulate the working of commercial banks?

7. If the US hikes the Fed rate, and India stays still, what will be the impact on Indian
currency? If the RBI wants to prevent the situation, what will it do and how?
8. What are the current challenges to Indian monetary policy?
9. One key driving factor for economic recovery is low interest rates. Comment with regard
to the monetary policy directives of India during recent times.
10. On April 22, 2009, the Reserve Bank of India (RBI) warned that banks, which engaged in
sponsoring and managing private pools of capital, were prone to high risk. Why so?
11. Examine the process of working of various tools of monetary policy of India.
12. According to you which works better: Repo or CRR? Why?

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