Indian Economy Quiz: Money and Banking in India

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.

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.

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.

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.

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.

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

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 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 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.

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…