Question

Which is the central agency to implement money market policies in India?

• A. SEBI
• B. RBI
• C. Enforcement Directorate
• D. Income Tax Department

Hint:

Remember this key distinction in financial markets:

\textbf{Money Market} (short-term funds,<1 year) is regulated by the \textbf{RBI}.
\textbf{Capital Market} (long-term funds,>1 year, stocks, bonds) is regulated by \textbf{SEBI}.

Answer 1

The Correct Option is B

Step 1: Understanding the Question
The question asks for the central agency responsible for implementing policies in India's money market. The money market is the segment of the financial market for short-term borrowing and lending.

Step 2: Defining the Roles of the Agencies


(A) SEBI (Securities and Exchange Board of India): SEBI is the regulator for the securities and commodity market in India, which is also known as the capital market (for long-term funds). It regulates stock exchanges, brokers, mutual funds, etc.

(B) RBI (Reserve Bank of India): The RBI is India's central bank and the primary regulator of the country's entire financial system. It has direct control over the money market, using tools like the repo rate, reverse repo rate, and cash reserve ratio to implement monetary policy and manage short-term liquidity.

(C) Enforcement Directorate (ED): This is a law enforcement and economic intelligence agency.

(D) Income Tax Department: This agency deals with direct tax collection.


Step 3: Final Answer
The Reserve Bank of India (RBI) is the central agency responsible for regulating and implementing policies in the money market. Therefore, option (B) is the correct answer.