The RBI acts as the custodian of the country’s foreign exchange reserves, manages exchange control and acts as the agent of the government in respect of India’s membership of the IMF. … The exchange control was so operated as to restrict the demand for foreign exchange within the limits of the available supplies of it.
What is custodian of foreign exchange reserves?
The Reserve Bank of India, is the custodian of the country’s foreign exchange reserves and is vested with the responsibility of managing their investment. The legal provisions governing management of foreign exchange reserves are laid down in the Reserve Bank of India Act, 1934.
Who is the custodian of foreign exchange reserves of India?
In India, the Reserve Bank of India Act 1934 contains the enabling provisions for the Reserve Bank to act as the custodian of foreign reserves, and manage reserves with defined objectives.
Why RBI is known as custodian of foreign exchange?
It manages, controls and supervises the foreign exchange reserves.It sets India’s exchange control policy and also administer foreign exchange regulation as an agent of the government of India that is why we can say that RBI acts as the custodian of the foreign exchange reserves.
How central bank is custodian of foreign exchange?
The central bank controls both the receipts and payments of foreign exchange. 2. It tries to maintain stability of the exchange rate. For this purpose, it buys or sells foreign currencies in the market to minimise fluctuations in the foreign exchange rates.
What is Fera?
The Foreign Exchange Regulation Act (FERA) was legislation passed in India in 1973 that imposed strict regulations on certain kinds of payments, the dealings in foreign exchange (forex) and securities and the transactions which had an indirect impact on the foreign exchange and the import and export of currency.
What are the supervisory functions of RBI?
The supervisory functions include giving license to banks along with their new branches, inspection of the assets and liabilities of the banks it regulates the financial position of the economy. It also issues directives and has the power to control Non- Bank Financial Institutions.
Who is the custodian of monetary reserves in India Mcq?
Reserve Bank of India
Apart from maintaining the rate of exchange of the rupee, RBI has to act as the custodian of India’s reserve of international currencies.
What is repo rate?
There is constant flow of funds between the central bank and other banks. The rates at which these funds change hands determine the rates at which lenders give loans to others, including retail borrowers. Repo rate is the rate at which the central bank gives loans to commercial banks against government securities.
Why RBI is called Reserve bank Quora?
Since the RBI has reserves of gold and other assets, it is called the ‘Reserve Bank of India’. A bank is an institution which accepts deposits from the public for the purpose of lending.