Q.Which regulatory body is primarily responsible for regulating and developing the capital market in India?

The missing term is RBI (Reserve Bank of India).

The pair links an institution to the type of bank it represents. The State Bank of India (SBI) is an example of a commercial bank, which accepts deposits and lends to the public for profit. Correspondingly, the Reserve Bank of India (RBI) is India's central bank — the apex monetary authority that issues currency, acts as banker …

The odd word is Foreign Exchange rate — the other three (Bank rate, Open market operations, Variable reserve ratios) are all quantitative tools the RBI uses to control credit.

The RBI controls the total supply of money and credit through quantitative (general) instruments, which affect the overall volume of credit in the economy:

• Bank rate — the rate at which the RBI lends to commercial banks.
• Open market operations (OMO) — buying/selling government securities to change banks' cash.
• Variable reserve ratios — the CRR and SLR that banks must maintain. …

(A) is false, but (R) is true.

Assertion (A): Foreign exchange management and control is undertaken by commercial banks — this is false. In India, foreign exchange is managed and controlled by the Reserve Bank of India (RBI) as the central bank (commercial banks only act as authorised dealers under RBI rules).

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The statement is False. (Detailed central-banking functions are from the older syllabus.)

The central bank (RBI in India) does act as the lender of last resort: when commercial banks face a shortage of funds and cannot borrow elsewhere, the central bank lends to them again …