Which of the following is a correct func

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

Which of the following is a correct function of Reserve Bank of India(RBI)?

Options:

Discounting the bill of exchange

Monetizing the government's debt

Accepting deposits from public

None of the above

Correct Answer:

Monetizing the government's debt

Explanation:

The correct answer is Option 2: Monetizing the government's debt

Discounting the Bill of Exchange: This is a function related to commercial banks rather than the central bank. The RBI primarily deals with policy and regulatory functions, not individual discounting of bills.
Monetizing the Government's Debt: This is indeed a correct function of the RBI. It involves the central bank purchasing government securities to provide liquidity, which effectively finances government expenditure and influences the money supply.
Accepting Deposits from Public: The RBI does not accept deposits from the general public. It deals with banks and financial institutions, not individuals.