Indian Economy GK Questions with Answers – Page 51

It amended the Reserve Bank of India Act, 1934 to insert the provisions on the inflation target and on the Monetary Policy Committee, so that the policy rate is now set by a committee and not by the Governor alone, and the framework of flexible inflation targeting became law.

Three of them come from the Reserve Bank, the Governor as chairperson, the Deputy Governor in charge of monetary policy and an officer of the Bank nominated by the Central Board, and three are appointed by the central government from among persons of ability and integrity with knowledge of economics…

In a repurchase agreement a bank sells government securities to the Reserve Bank and agrees to buy them back the next day at a fixed price; the difference is the interest, and the rate is the repo rate.

The Bank began as a shareholders' institution, and the Reserve Bank (Transfer to Public Ownership) Act, 1948 transferred its shares to the central government with effect from the first day of 1949, since when it has been fully owned by the Government of India.

This body, formally the Royal Commission on Indian Currency and Finance, reported in 1926 and recommended the creation of a central bank separated from the government.

Under the Minimum Reserve System, adopted in 1957 in place of the earlier proportional reserve system, the Reserve Bank has to hold assets worth at least two hundred crore rupees against the notes it issues, of which gold must account for one hundred and fifteen crore and the remaining eighty-five…

The Imperial Bank of India had itself been created in 1921 by merging the three presidency banks, the Bank of Bengal of 1806, the Bank of Bombay of 1840 and the Bank of Madras of 1843.

The cash reserve ratio is the share of a bank's net demand and time liabilities that it must maintain as cash balances with the Reserve Bank.

The National Bank for Agriculture and Rural Development was set up on 12 July 1982 on the recommendation of the committee headed by B. Sivaraman, and it took over the agricultural credit functions until then performed by the Reserve Bank and the refinance work of the Agricultural Refinance and Development…

The Reserve Bank began in 1935 as a shareholders' bank with privately held capital.

The one rupee note and all coins are issued by the Government of India through the Ministry of Finance, and the one rupee note carries the signature of the Finance Secretary rather than that of the Governor of the Reserve Bank.

On 19 July 1969 the government nationalised fourteen of the largest commercial banks in the country, the aim being to take banking to rural areas, direct credit to agriculture and small industry, and end the concentration of bank funds in a few business houses.

In a repurchase or repo transaction a bank sells government paper to the Reserve Bank and agrees to buy it back shortly afterwards at a slightly higher price; the difference works out as interest at the repo rate.

M3 is M1 plus time deposits with banks, and it is called broad money or the aggregate monetary resource. It is the measure the Reserve Bank follows most closely because it captures both spendable balances and funds held for a fixed term.

The Reserve Bank of India was constituted under the Reserve Bank of India Act of 1934, on the recommendation of the Hilton Young Commission, and started functioning on 1 April 1935 with its central office at Calcutta, which was shifted permanently to Bombay in 1937.

The Foreign Exchange Management Act was passed in 1999 and came into force on 1 June 2000, replacing the Foreign Exchange Regulation Act of 1973.

Value added tax replaced the old general sales tax from 1 April 2005, when most states adopted it on the recommendation of the empowered committee of state finance ministers.

IBM and Coca-Cola wound up their Indian operations in 1977 rather than dilute their holdings to 40 per cent. The Foreign Exchange Regulation Act, passed in 1973, required foreign companies to cut their equity in Indian subsidiaries to that level and to obtain permission for most dealings in foreign exchange.

The language panel on the reverse of an Indian banknote carries the value of the note in 15 languages. Hindi and English are not part of that panel: they appear on the front of the note, so the total number of languages printed on a note comes to 17.

Gross Domestic Product counts the value of final goods and services produced inside a country during a year. Only final output is added, because the value of intermediate goods is already inside the price of the finished product, and counting both would be double counting.