Question:
Which of the following is not a function of the RBI?
Which of the following is not a function of the RBI?
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Remember: Monetary = RBI, Fiscal = Government.
Updated On: Jul 1, 2025
- Fiscal policy functions
- Exchange control functions
- Issuance, exchange and destruction of currency notes
- Monetary authority functions
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The Correct Option is A
Solution and Explanation
The Reserve Bank of India (RBI) is India’s central bank and performs many important roles in the country’s monetary and financial system.
Its main functions include formulating and implementing monetary policy, acting as the banker to the government, managing foreign exchange reserves, issuing and managing currency notes, and supervising the financial sector.
The RBI also handles exchange control functions, ensuring that India’s external payments and receipts are regulated according to the Foreign Exchange Management Act (FEMA).
It also acts as the country’s monetary authority to control inflation, money supply, and interest rates.
However, fiscal policy functions — such as deciding how the government will spend and raise money through taxes, subsidies, and budgetary allocations — are handled by the Ministry of Finance, Government of India, not the RBI.
Therefore, the correct answer is option (A) Fiscal policy functions, which are not part of the RBI’s responsibilities.
Its main functions include formulating and implementing monetary policy, acting as the banker to the government, managing foreign exchange reserves, issuing and managing currency notes, and supervising the financial sector.
The RBI also handles exchange control functions, ensuring that India’s external payments and receipts are regulated according to the Foreign Exchange Management Act (FEMA).
It also acts as the country’s monetary authority to control inflation, money supply, and interest rates.
However, fiscal policy functions — such as deciding how the government will spend and raise money through taxes, subsidies, and budgetary allocations — are handled by the Ministry of Finance, Government of India, not the RBI.
Therefore, the correct answer is option (A) Fiscal policy functions, which are not part of the RBI’s responsibilities.
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