What is the role of the Reserve Bank of India (RBI)?

Prepare for the CA Foundation Business Law Exam with our comprehensive quiz. Utilize flashcards and multiple-choice questions, each complete with hints and explanations. Ace your exam confidently!

The role of the Reserve Bank of India (RBI) primarily involves managing the monetary policy and overseeing the currency in the country. This includes controlling inflation, regulating interest rates, and ensuring the overall stability of the financial system. The RBI works to promote economic growth by adjusting the money supply and influencing lending and borrowing rates through various monetary policy tools.

Monetary policy is essential as it determines the cost of borrowing money for consumers and businesses, which in turn affects spending and investment in the economy. Additionally, the RBI is the sole authority to issue and manage currency notes in India, ensuring that the country’s currency system is stable and efficient.

While the other choices relate to important functions within the financial and legal systems, they do not accurately represent the RBI's primary functions. For instance, regulating insolvency proceedings and handling debt recovery fall under the purview of other designated agencies and legal frameworks. Similarly, deposit insurance is typically managed by separate entities such as the Deposit Insurance and Credit Guarantee Corporation (DICGC) rather than the RBI itself.

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