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Structure & Functions of RBI General Knowledge Questions

General Knowledge with special reference to Banking Industry and Reserve Bank of India. Multiple Choice Question Bank for Structure of RBI for IBPS 2015, IBPS 2016 and RBI Grade B examinations.


Who appoints the governor of Reserve Bank of India?
[A]President of India
[B]Prime Minister of India
[C]Central Government
[D]Vice President of India

Central Government
The Governor of RBI is appointed by the Central Government. The approval comes from Appointments Committee of the Cabinet.


RBI has a principle that overseas banks are given near national treatment in India only if their home country allowed Indian banks to open branches there without much restrictions. This principle is known as __?
[B]National Treatment
[C]Equal Treatment
[D]Fair Deal



What is sold and purchased during Open Market Operations by RBI?
[A]Government Securities
[B]Commercial Papers
[C]Certificates of Deposits
[D]Global Depository Receipts

Government Securities
OMOs are conducted by the RBI via the sale/purchase of government securities to/from the market with the primary aim of modulating rupee liquidity conditions in the market OMOs are an effective quantitative policy tool in the armoury of the RBI, but are constrained by the stock of government securities available with it at a point in time


The custodian of India’s foreign exchange reserve is__:
[A]Department of Finance
[B]State Bank of India
[C]Reserve Bank of India
[D]Board of Financial Supervision

Reserve Bank of India
In 1946, India became a member of the International Monetary Fund (IMF) and from that time RBI has the responsibility of maintaining fixed exchange rates with all other member countries of the IMF. Apart from maintaining the rate of exchange of the rupee, RBI has to act as the custodian of India’s reserve of international currencies.


If Repo Rate is 6%, then which among the following is correct about Reverse Repo and Marginal Standing Facility?
[A]Reverse Repo Rate is 7% and Marginal Standing Facility is 8%
[B]Reverse Repo Rate is 5% and Marginal Standing Facility is 8%
[C]Reverse Repo Rate is 5% and Marginal Standing Facility is 7%
[D]Reverse Repo Rate is 8% and Marginal Standing Facility is 7%

Reverse Repo Rate is 5% and Marginal Standing Facility is 7%
If Repo Rate is X%, reverse repo rate is X-1% and MSF is X+1%.


Which of the following is available to banks to borrow overnight funds from RBI against the approved government securities?
[A]Repo Rate
[B]Bank Rate
[C]Base Rate
[D]Marginal Standing Facility

Marginal Standing Facility
MSF is the rate at which the banks are able to borrow overnight funds from RBI against the approved government securities. The overall idea behind the MSF is to contain volatility in the overnight inter-bank rates.


What is the minimum bid under Liquidity Adjustment Facility?
[A]1 Crore
[B]2 Crore
[C]5 Crore
[D]10 Crore

5 Crore
Under the Liquidity Adjustment Facility, bids need to be for a minimum amount of Rs.5 crore and in multiples of Rs. 5 Crore thereafter.


Which of the following is NOT a correct statement with regard to Liquidity Adjustment Facility:
[A]Only Government securities are used as collateral
[B]Repo Inject liquidity in the system, while reverse repo absorbs liquidity from the system
[C]RBI makes separate announcements for Repo and Reverse Repo Rates
[D]Regional Rural Banks are not eligible to participate in Repo auctions

RBI makes separate announcements for Repo and Reverse Repo Rates
RBI only announces Repo Rate. The Reverse Repo Rate is linked to Repo Rate and is 100 basis points (1%) below repo rate. RBI makes decision regarding Repo Rate on the basis of prevalent market conditions and relevant factors.


Which of the following is the main objective of conductive Open Market Operations?
[A]Adjust the capitalization of Banks
[B]To contain current account deficit
[C]To boost share markets
[D]To adjust liquidity conditions

To adjust liquidity conditions
Open Market Operations (OMO) refer to the purchase and sale of the Government Securities (G-Secs) by RBI from / to market. The objective of OMO is to adjust the rupee liquidity conditions in the economy on a durable basis. The working of OMOs is defines as below:


What is the number of non-official directors in RBI?

There are 16 non-official directors in RBI. Out of them, there are four represent the local Boards located in Delhi, Chennai, Kolkata and Mumbai, thus representing 4 regions of India. Rest 12 are nominated by the Reserve Bank of India.