Question

Which of the following has the monopoly of note issue in India ?

• A. World Bank
• B. Reserve Bank of India
• C. Commercial Bank
• D. Exim Bank

Hint:

The issuance of currency is a core function of a country's central bank. For India, the central bank is the RBI. This monopoly helps the central bank to control the money supply in the economy.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question asks to identify the institution that has the sole legal authority to issue currency notes in India. This is a primary function of a country's central bank.

Step 2: Detailed Explanation:
\begin{itemize} \item The Reserve Bank of India (RBI) is India's central bank. As per Section 22 of the Reserve Bank of India Act, 1934, the RBI has the sole right (monopoly) to issue banknotes in India.
\item The only exception is the one-rupee note, which is issued by the Ministry of Finance, Government of India. However, even these notes are put into circulation by the RBI. All other denominations of banknotes (\(\text{Rs. } 2, 5, 10, 20, 50, 100, 200, 500, 2000\)) are issued exclusively by the RBI.
\item The other institutions listed do not have this function: \begin{itemize} \item World Bank: An international financial institution that provides loans and grants to governments of low- and middle-income countries. \item Commercial Bank: Financial institutions like SBI, HDFC, etc., that accept deposits and provide lending services to the public. They do not issue currency. \item Exim Bank (Export-Import Bank of India): A specialized financial institution that finances and promotes India's international trade. \end{itemize} \end{itemize}

Step 3: Final Answer:
The Reserve Bank of India has the monopoly of note issue in India.