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Banking Awareness Questions on RBI and Currency Issues

Banking Awareness Questions on

RBI and Currency Issues

Reserve Bank of India (RBI)

RBI Functions - Banking Awareness Questions on RBI

  • RBI is the central bank of India and wholly owned by the Govt. of India.
  • It was established on 1st April 1935 under RBI Act 1934 by the recommendations of Hilton Young Commission.
  • It was nationalized in the year 1949.
  • It has 19 regional offices.
  • The head office of the RBI is located in Mumbai (previously in Calcutta).

Current Governor of RBI:
Mr. Urjit R. Patel
Four Deputy Governors of RBI:

  1. BP Kanungo,
  2. S S Mundra,
  3. N S Vishwanathan and
  4. Viral Acharya.

Important Functions of RBI:

As a Central Bank:
– Note Issuing Authority
– Banker of the Government
– Banker’s Bank (Every Bank has account in RBI)
– Controller of Credit (Monetary Control Tools – Bank Rate, CRR, SLR, Open Market Operations)
– Clearing House Function
– Training Facilitation
– Provision of Agricultural Credit
– Provision of Industrial Credit
– Custodian of Foreign Exchange Reserves
– Collects and Publishes Banking Data

As an Ordinary Bank:
– Granting Short term loans
– Recovering Short term loans
– Buying/Selling of Bills
– Accepting Deposits from banks
– Dealing with Foreign Securities
– Dealing with costly metals
– Dealing with banks of other countries

Limitations of RBI:
– RBI cannot functions as Commercial Banks cannot give loans on fixed assets.
– RBI cannot give unsecured loans.

Who was the first governor of RBI (set up in 1935)?
Osborne Smith.

Who is the 24th Governor of RBI?
Mr. Urjit R. Patel.

Important Rates Determined by RBI:

Bank Rate
Repo Rate
Reverse Repo Rate
Cash Reserve ratio
Statutory Liquidity Ratio
Marginal Standing Facility

Security Printing & Minting Corporation of India.

Whose signature is found on one rupee note in India?
Finance Secretary (It is used by Ministry of Finance).

Where would be the first printing press for bank notes was establishing in India?
Nasik (Maharashtra). This was established in the year 1928.

The amount of currency is written in how many languages on Indian currency note?
17 languages.

Which was the first note issued by the RBI in India?
Five rupee note (having King George VI’s portrait).

In which place security paper mill is located in India to print security paper to print bank note?
Hoshangabad, Madhya Pradesh.

The Currency notes issued by Reserve Bank of India under the signature of
(a) Governor of RBI
(b) Finance Minister
(c) Deputy Governor of RBI
(d) Home Minister

The note issue system in India is based on
(a) Gold Deposit System
(b) Minimum Reserve System
(c) Proportional Reserve System
(d) Simple Deposit System.

Who is the final authority for deciding the design form and material of bank notes in India?
(a) Central Government
(b) Reserve Bank of India
(c) Indian Banks Association
(d) Note Issuing Authority of India

Under Section 19 of the Reserve Bank of India Act, 1934, The RBI has been prohibited from
(a) Making loans or advances
(b) Drawing or accepting bills payable otherwise than on demand
(c) Allowing Interest on Deposits or current accounts
(d) All of the above.

Drawing, accepting, making or issuing of any promissory note, hundi or bill of exchange expressed to be payable to bearer on demand by a person other than the RBI or the Central Govt. is prohibited under
(a) Banking regulation Act, 1949
(b) Section 31 (1) of the RBI Act, 1934
(c) Negotiable Instrument Act, 1881
(d) Indian Contract Act,1872

The opening branches by banks is governed by the provisions of
(a) Section 23 of the Banking Regulation Act, 1949
(b) Section 24 of Reserve Bank of India Act, 1934
(c) Section 131 of the negotiable
(d) Section 45 of Banking Nationalization Act 1969

Rupee Coins are the legal tender in India under the provisions of
(a) Reserve Bank of India Act, 1934
(b) Negotiable Instrument Act, 1881
(c) Banking Regulation Act, 1949
(d) Indian Coinage Act, 1906

In terms of Section 24 of the Reserve Bank of India Act, 1934, the RBI may issue bank notes for the maximum denomination of
(a) Rs.500
(b) Rs.5000
(c) Rs.10000
(d) Rs.1000

With Which one of the following will setup core banking infrastructure for Rural Banks?
(a) RBI
(d) IBA

What are teaser loan rates charged by banks?
(a) Fixed Rate
(b) Floating rate of interest charged by banks
(c) Rate of interest in the initial period is less and goes up subsequently
(d) Rate of Interest in the initial period is more and it goes down subsequently

In which year the system of decimal coinage was introduced on
(a) 15th august, 1947
(b) 26th January 1950
(c) 1st April 1957
(d) All of the Above

Which of the following is the sole authority for issue of currency in India?
(a) Government of India
(b) Reserve Bank of India
(c) Controller of Currency
(d) All of the Above.

The minting of rupee coin is governed by
(a) Coinage Act, 1906
(b) RBI Act 1934
(c) Banking Regulation Act, 1949
(d) Currency Act, 1902

The opening of branches by banks is governed by the provisions of
(a) Section 23 of the Banking Regulation Act, 1949.
(b) Section 24 of Reserve Bank of India Act, 1934.
(c) Section 131 of the Negotiable Instruments Act, 1881
(d) Section 45 of Bank Nationalization Act, 1969.

In a period of depression when the RBI needs to encourage the banking system to create more credit
(a) reduces the bank rate
(b) raises the Bank Rate.
(c) permits the bank rate to be decided by market forces
(d) All of those

Whenever RBI needs to restrict the expansion of credit. IT
(a) reduces the bank rate
(b) raises the bank rate
(c) freezes the bank rate
(d) All of the Above.

Which of the following is not a measure adopted by the govt? of India or RBI to control inflation?
(a) Monetary Policy
(b) Fiscal Policy
(c) Public Distribution system
(d) Price Control
(e) Financial Inclusion

Whenever RBI does some Open Market Operations (OMP) transactions, IT actually wishes to regulate which of the following?
(a) Inflation only
(b) Liquidity in the economy
(C) Borrowing powers of the banks
(d) Flow of foreign Direct Investments

The RBI fixes the interest rates on which of the following deposit schemes?
(a) Recurring Deposits
(b) Savings bank.
(c) Fixed deposits above 5 years maturity
(d) Flexi Deposit Schemes.

Which of the following is not a function of the Reserve Bank of India?
(a) Exchange control functions
(b) Fiscal Policy Functions.
(c) Monetary Authority Functions
(d) Supervisory and Control Function.
(e) Insurance, exchange and destruction of currency notes

Which of the below functions is not performed by the Reserve Bank of India?
(a) Regulation of Banks in India
(b) Currency Management in India
(c) Control and Supervision of Money Supply
(d) Regulation of Foreign Direct Investment (FDI) in India.
(e) Foreign Currency management in India

Which of the following is not a function of the RBI?
(a) Maintaining Forex
(b) Currency Management
(c) Deciding Bank Rate, CRR, SLR from time to time.
(D) Opening Savings Bank Account for general public.
(e) Prescribing the Capital Adequacy Ratio.

If a customer wishes to purchase some US dollars in India. He/She should go to
(a) Public Debt Division of the RBI
(b) American Express Bank Only
(c) RBI or any branch of a Bank which is authorized for such business
(d) Ministry of Foreign Affairs

The RBI asked banks to spell out their policy, procedure, and size of the business which of the following aspects of banking?
(a) On-shore banking
(b) Off-shore banking
(c) Investments in secondary market
(d) Wealth Management

Who issues treasury bills and what is mean by Treasury Bills?
A Financial Instrument issued by the Reserve Bank of India (RBI as the agent of central government) for short-term borrowing

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