The Reserve Bank of India Questions and Answers

Answer: D

Correct answer: C.D. Deshmukh

Sir Chintaman Dwarkanath Deshmukh became the first Indian Governor of the Reserve Bank in August 1943, the three preceding Governors having been British.

He held office through the transfer of power and the Bank's nationalisation in 1949, and afterwards served as Finance Minister of India from 1950 to 1956 - the only person to have held both posts until Manmohan Singh did so decades later. Sir Osborne Smith was the first Governor of all, from 1935, and L. K. Jha held the office in the 1960s.

Answer: B

Correct answer: White Label ATMs

A white label ATM is owned and operated by a non-bank entity authorised by the Reserve Bank, and carries the operator's brand rather than any bank's. Cash and accounts remain with sponsor banks; the operator supplies and runs the machine and earns interchange on the transactions.

The scheme was permitted in 2012 to extend ATM coverage into smaller towns and rural areas, where banks had little commercial reason to deploy their own machines. "White label" is the general term for a product sold without the maker's brand.

Answer: B

Correct answer: Rs 25 crore

The Reserve Bank set a minimum paid-up equity capital of Rs 25 crore for an entity operating a Trade Receivables Discounting System, together with a requirement to maintain a positive net worth thereafter.

TReDS is an electronic platform on which micro, small and medium enterprises auction their receivables from large buyers to financiers, so that an invoice can be turned into cash without waiting for the buyer's credit period. The capital requirement is set at a level that ensures the operator's continuity, the platform being infrastructure rather than a lender.

Answer: B

As a step towards harmonisation of the counterparty exposure limit to single NBFC with that of the general limit, it has been decided to raise a bank’s exposure limit to a single NBFC to 20% of Tier-I capital of the bank

Answer: B

Correct answer: Amitav Ghosh

Amitav Ghosh held office from 15 January to 4 February 1985 - about three weeks, the shortest tenure of any Governor.

His was an acting appointment in the interval between Manmohan Singh's departure and R. N. Malhotra taking charge, which is how such very short tenures arise: a Deputy Governor holds the office until a substantive appointment is made. The contrast is with Sir Benegal Rama Rau, whose seven and a half years from 1949 to 1957 remain the longest.

Answer: C

Correct answer: 1st April, 1935

The Reserve Bank commenced operations on 1 April 1935, under the Reserve Bank of India Act 1934.

The two dates are worth keeping distinct, since both appear among the options: 1934 is the Act, 1935 the opening. The Bank began as a shareholders' institution with its central office in Calcutta, moved permanently to Bombay in 1937, and was nationalised on 1 January 1949. Its establishment followed the Hilton Young Commission's recommendation of 1926.

Answer: A

Correct answer: Recovery of bad loans

The SARFAESI Act 2002 lets a secured creditor enforce its security without going to court: after a defaulting borrower fails to respond to a sixty-day notice, the bank may take possession of the secured asset and sell it.

Its purpose was speed. Recovery through the ordinary courts and even through the debt recovery tribunals had become so slow that security was of little practical value, which raised the cost of credit for everyone. The Act shifted the initiative to the creditor, leaving the borrower to approach the tribunal if aggrieved.

Answer: C

Correct answer: Half-year

The Reserve Bank publishes its Report on Management of Foreign Exchange Reserves half-yearly, with data as at the end of March and the end of September.

The report sets out the composition of the reserves, the framework governing their investment, and the objectives of safety, liquidity and return in that order of priority. Publishing twice a year is a transparency measure: reserves are public assets managed on the country's behalf, and periodic disclosure of how they are deployed is expected of a central bank without revealing positions in real time.

Answer: A

Correct answer: Punjab National Bank

Punjab National Bank has the second largest branch network in the country after the State Bank of India.

Its position was consolidated by the 2020 amalgamation, in which Oriental Bank of Commerce and United Bank of India were merged into it, taking its network past ten thousand branches. PNB is also the older institution of the two named: founded at Lahore in 1894, it was the first Indian bank started wholly with Indian capital, and it was nationalised in 1969.

Answer: D

Correct answer: All of these

All three act on the total volume of credit rather than on its direction, which is what makes an instrument quantitative.

The cash reserve ratio locks up a share of deposits as a non-interest-bearing balance with the RBI; the statutory liquidity ratio requires another share to be held in cash, gold or approved securities; and the bank rate prices the Reserve Bank's own lending. Open market operations belong to the same group. Selective controls - margin requirements, purpose-specific ceilings, moral suasion - act on direction instead.