Discussion
Which among the following is incorrect?
Answer: D
Correct answer: RBI does not regulate the flow of credit
That statement is false, and it inverts one of the RBI's principal functions. Regulating the flow of credit is monetary policy, conducted through the repo rate, the cash reserve ratio, the statutory liquidity ratio and open market operations.
The other three are accurate. The RBI is the bank of issue, holding the sole right to issue currency notes other than the one-rupee note; it is banker to the Government, keeping its accounts and managing its debt; and it is the bankers' bank, holding their reserves and acting as lender of last resort.
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