The Central Bank is a very important institution in the modern economy. What are the main characteristics of the Reserve Bank of India?

(A) India got its central bank in 1935.
(B) It is the custodian of the foreign exchange reserves of the economy.
(C) It controls the money supply of the country through various methods, like bank rate, open market operations etc.
(D) It also acts as a bank for the banking system.

Choose the correct answer from the options given below:

(A), (B), (C) and (D)

The correct answer is Option (3) → (A), (B), (C) and (D)

(A) India got its central bank in 1935 – Correct. The Reserve Bank of India (RBI) was established on 1st April 1935 under the RBI Act, 1934.

(B) It is the custodian of the foreign exchange reserves of the economy – Correct. RBI manages India’s foreign exchange reserves and implements the Foreign Exchange Management Act (FEMA).

(C) It controls the money supply of the country through various methods, like bank rate, open market operations etc. – Correct. This refers to RBI’s role in conducting monetary policy to maintain price stability and ensure liquidity in the economy.

(D) It also acts as a bank for the banking system – Correct. The central bank acts as a banker to other banks, holding their reserves, lending to them (lender of last resort), and facilitating inter-bank transactions.