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Ch 10Reserve Bank of India — Class 11 Commerce, concept-first.

Every country with an organised banking system needs one institution standing above all the ordinary banks — an institution that issues currency, holds the government's account, keeps the whole banking system solvent, and steers the supply of money and credit in the economy.

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Key concepts

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Origin and Status of the RBI

The RBI began operations on 1 April 1935 under the RBI Act, 1934, as a shareholders' bank, and was nationalised on 1 January 1949.

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Chapter contents

The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.

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Meaning and Origin of the Reserve Bank of India

Every country with an organised banking system needs one institution standing above all the ordinary banks — an institution that issues currency, holds the government's account, keeps the whole bankin…

2

Organisation and Management

The RBI's affairs are managed by a Central Board of Directors, appointed by the Central Government under the RBI Act, 1934. The Central Board has two broad categories of directors:

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Objectives of the Reserve Bank of India

The Preamble to the RBI Act, 1934 itself states the RBI's core purpose: "to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally t…

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Functions of the Reserve Bank of India — Traditional Central Banking Functions

The RBI performs the same core functions that any modern central bank performs, adapted to India's needs.

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Monetary Policy — Quantitative and Qualitative Tools of Credit Control

The RBI controls the volume and direction of credit in the economy through two broad categories of tools.

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Developmental, Promotional and Supervisory Functions

Beyond its traditional central-banking role, the RBI performs several functions aimed specifically at developing India's financial system and protecting depositors.

Exercises

+Show 9 questions9 questions
  1. Q1When was the Reserve Bank of India established, and when was it nationalised? What is its present legal status?Free
  2. Q2Explain the composition of the Central Board of Directors of the RBI.Free
  3. Q3State any four objectives of the Reserve Bank of India as laid down in the Preamble to the RBI Act, 1934.Free
  4. Q4What is the Minimum Reserve System of note issue followed by the RBI? Why was it adopted in place of the earlier Proportional Reserve System…Preview
  5. Q5Distinguish between the Bank Rate and the Repo Rate as tools of monetary policy.Preview
  6. Q6Explain any three qualitative (selective) methods of credit control used by the RBI.Preview
  7. Q7Why is the RBI called the "lender of last resort"?Preview
  8. Q8Name any three financial institutions the RBI helped establish to promote agricultural, industrial and export credit in India.Preview
  9. Q9State any three supervisory functions performed by the RBI over commercial banks.Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 5 questions5 questions
  1. Q1The Reserve Bank of India commenced its operations from April 1, ________. (a) 1936 (b) 1935 (c) 1934 (d) 1933Preview
  2. Q2The Reserve Bank of India commenced its operations from April 1 of ______. (a) 1934 (b) 1936 (c) 1933 (d) 1935Preview
  3. Q3Who are the persons involved in RBI Administration ?Preview
  4. Q4(a) Classify the various functions of Reserve Bank of India. (any 5) OR (b) Explain MUDRA Bank.Preview
  5. Q5Real Time Gross Settlement System was launched by the RBI in the year : (a) 2013 (b) 2005 (c) 2014 (d) 2003Preview