money supply, banking & financial institutions section 3 MCQ Questions & Answers Detailed Explanation

Answer: (d)

Recently RBI used the tool forex swap to increase liquidity in the economy under which, RBI took dollars from Banks and it paid Indian currency to banks and this transaction will be reversed after 3 years.

Market Stabilization Scheme and Sterilization are the same and used to manage liquidity in case of foreign capital inflow.

Under Liquidity Adjustment Facility (LAF), RBI does overnight as well as long term repo operations.

Answer: (a)

Answer: (d)

The Reserve Bank of India is the main monetary authority of the country and besides that, in its capacity as the central bank, acts as the bank of the national and state governments.

Sometimes it happens that some of the banks close down due to non-recovery of loans or such other issues. In such conditions, people have to suffer as their money is with the bank then.

For this reason, there is a provision for winding up of the banking company under the Banking Regulation Act, 1949. The power of winding up of Bank lies in the hand of the Reserve Bank of India.

Answer: (b)

India Post Payment Bank is a public sector enterprise and comes under the Department of Posts, Ministry of Communications. It is a payment bank and accepts only demand deposits (current and savings account).

‘Department of Post’ is a department of Govt. of India to provide mail and various services. Now, Govt. of India (through the Department of Post, Ministry of Communication) created a wholly-owned PSU, ‘India Post Payment Bank’, to provide banking facilities.

Answer: (d)

Answer: (c)

Convertibility of rupee implies freely permitting the conversion of rupee to other currencies and vice versa.

Currency Convertibility is the ease with which a country’s currency can be converted into gold or another currency.