The authority of the Reserve Bank of India to regulate and supervise payment systems in India flows from which law?
- A.Banking Regulation Act, 1949
- B.Payment and Settlement Systems Act, 2007
- C.Negotiable Instruments Act, 1881
- D.Companies Act, 2013
Correct answer
Explanation
The correct answer is B, the Payment and Settlement Systems Act, 2007. It makes the Reserve Bank the designated authority for the regulation and supervision of payment systems in India, so that no person may operate a payment system without its authorisation. Real Time Gross Settlement, the National Electronic Funds Transfer system and the retail systems run by the National Payments Corporation of India all work under this framework.
Option A, the Banking Regulation Act, 1949, governs the licensing, capital, management and inspection of banks themselves. Option C, the Negotiable Instruments Act, 1881, governs cheques, bills of exchange and promissory notes, including the offence of dishonour of a cheque, and it is the strongest distractor because cheques are a means of payment. Option D, the Companies Act, 2013, governs the incorporation and management of companies in general.
Read the full article: Functions of the RBI: Monetary Policy and Tools
Practice Questions
View allIn which year was the RBI nationalised?
- A.1971
- B.1956
- C.1949
- D.1935
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The Reserve Bank of India began as a shareholders' bank and was taken into public ownership on 1 January 1949 under the Reserve Bank (Transfer to Public Ownership) Act, 1948.
Read the full explanation →The legal provisions governing the management of foreign exchange reserves are laid down in the Reserve Bank of India Act, ______.
- A.1947
- B.1934
- C.1923
- D.1971
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The Reserve Bank of India Act, 1934 is the statute that created the Bank and it carries the provisions on the custody and deployment of the country's foreign exchange reserves, which the Bank holds and invests.
Read the full explanation →Which of these institutions fixes the Repo Rate and the Reverse Repo Rate in India?
- A.Ministry of Finance
- B.State Bank of India
- C.Comptroller and Auditor General of India
- D.Reserve Bank of India
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Policy rates are announced by the Reserve Bank, and since 2016 the decision is taken by its Monetary Policy Committee of six members under the chairmanship of the Governor.
Read the full explanation →The Reserve Bank of India commenced its operations on
- A.1 April 1935
- B.1 July 1955
- C.1 January 1949
- D.1 April 1934
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The Reserve Bank of India Act was passed in 1934 and the Bank began work on the first day of April in the following year, with its central office at Calcutta.
Read the full explanation →The establishment of the Reserve Bank of India was recommended by which commission?
- A.Hilton Young Commission
- B.Narasimham Committee
- C.Fazl Ali Commission
- D.Sarkaria Commission
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Formally the Royal Commission on Indian Currency and Finance, it reported in 1926 and recommended that the currency and credit functions then divided between the Government and the Imperial Bank be placed in a single central bank.
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