RBI Act Quiz

In 1935, when the Reserve Bank of India (RBI) began operations under the RBI Act, 1934, what was its ownership structure?

• Wholly owned by the Government of India from the start.

• Held by private shareholders (the government had no majority ownership).

• Jointly owned by the central and provincial governments.

• Owned and operated by the Bank of England as a subsidiary.

According to the Reserve Bank of India Act, 1934, what is a “scheduled bank”?

• A bank included in the Second Schedule of the RBI Act, having fulfilled the required conditions (such as minimum paid-up capital).

• Any bank that is government-owned and nationalized.

• A bank that operates exclusively in rural areas under special license.

• A foreign bank operating in India.

What was the original authorized capital of the Reserve Bank of India, as specified in the RBI Act, 1934?

• Rs. 5 crores (five crores of rupees).

• Rs. 1 crore.

• Rs. 100 crores.

• The Act did not specify any capital amount.

Under the RBI Act, 1934, what authority does the Central Government have over the Reserve Bank of India’s functioning?

• It may issue directions to the RBI deemed necessary in the public interest (after consulting the RBI Governor).

• It can take over all day-to-day operations of RBI at any time.

• It has no role whatsoever in influencing RBI policies by law.

• Parliament must approve each monetary policy decision of the RBI.

Which of the following is NOT among the categories of members on the RBI’s Central Board of Directors as specified in the RBI Act?

• The Governor and Deputy Governors of the RBI.

• One government official nominated by the Central Government.

• Directors (one each) representing the four Local Boards of RBI.

• Representatives of commercial banks elected by those banks.

What is the maximum number of Deputy Governors that the RBI can have under the provisions of the RBI Act, 1934?

• Four Deputy Governors (at most).

• Two Deputy Governors.

• Six Deputy Governors.

• The Act does not impose any specific limit.

Under the RBI Act, 1934, what is the length of a Governor’s term in office?

• Up to five years per term (with eligibility for re-appointment).

• A fixed three-year term, non-renewable.

• Serves at the pleasure of the Central Government with no fixed term.

• Until reaching 65 years of age.

The RBI Act provides for Local Boards of the Reserve Bank of India. How are these Local Boards structured and what is their role?

• There are four Local Boards (one each for different regions of India) that advise the Central Board on regional and local matters.

• There is one Local Board in each state, functioning as a mini-RBI for that state.

• Local Boards were a feature at inception but have been abolished and have no role today.

• The Act establishes five Local Boards corresponding to five economic zones, which directly control currency issuance in their zones.

Who among the following would NOT be eligible (disqualified) to serve as a Director on the RBI’s Central Board, according to the RBI Act?

• A sitting Member of Parliament (MP) or a State Legislature.

• An eminent economist from a university with no commercial bank affiliation.

• A Deputy Governor of the RBI.

• A central government official nominated by the Government.

Which of the following is a type of business that the Reserve Bank of India is allowed to conduct under the RBI Act?

• Granting loans or advances to commercial banks against approved securities.

• Directly lending to the general public and ordinary commercial enterprises.

• Purchasing shares and ownership stakes in industrial companies as investments.

• Engaging in trade or sale of commodities on its own account.