Discussion
Which of the following is true about the restrictions on RBI?
(i) It is not to compete with the commercial banks.
(ii) It is not allowed to pay interest on its deposits.
(iii) It cannot engage directly or indirectly in trade.
(iv) It cannot acquire or advice loans against immovable property.
(v) It is prohibited from purchasing its own shares or the shares of any other bank or any company or granting loans on such security.
Answer: C
Certain restrictions have been imposed on the Reserve Bank as it is a central bank. It is not to compete with the commercial banks. It is not allowed to pay interest on its deposits. It cannot engage directly or indirectly in trade. It cannot also acquire or advice loans against immovable property. It is also prohibited from purchasing its own shares or the shares of any other bank or any company or granting loans on such security.
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