When the Reserve Bank raises the repo rate to control inflation, the likely immediate effect is that

The correct answer is A, the Hilton Young Commission. 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. Its recommendation led to the Reserve Bank of India Act, 1934, under which the Bank began work on 1 April 1935.

Option B, the Chamberlain Commission of 1913 and 1914, also examined Indian currency and finance and had John Maynard Keynes as a member, but the central bank it discussed was not set up, which makes it the standard distractor. Option C, the Fowler Committee of 1898, dealt with the gold standard question in India. Option D, the Narasimham Committee, belongs to the era of reform after 1991 and made recommendations on the banking sector, long after the Reserve Bank existed.

The correct answer is B, 1 January 1949. 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.

Option A, 1 April 1935, is the date the Bank began operations under the Act of 1934, not the date of nationalisation, and mixing the two is the commonest error in this question. Option C is the date of independence and has no connection with the ownership of the Bank. Option D, 19 July 1969, is the date on which fourteen major commercial banks were nationalised, a separate event; six more were nationalised in 1980.

The correct answer is B. 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. It is the policy rate announced by the Monetary Policy Committee, so a change in it moves the whole structure of short term interest rates.

Option A describes the reverse repo rate, under which banks lend their surplus to the central bank, and the standing deposit facility now performs the same absorbing role. Option C describes a lending rate to customers, such as the benchmark rate to which a bank links its loans, which is set by the bank and not by the Reserve Bank. Option D describes government borrowing through the sale of dated securities, which the Bank manages as debt manager but which is not the repo rate.

The correct answer is C, six. 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, banking or finance.

Option A, four, is the quorum for a meeting rather than the strength of the Committee, which is why it is offered here. Option B and option D are simply wrong numbers, though seven tempts candidates who count the Governor twice, once as chairperson and once as a member. Decisions are taken by a majority of members present and voting, and if the votes are equally divided the Governor has a second or casting vote, which is possible only with an even number of members.

The correct answer is A, the Finance Act, 2016. 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.

Option B, the Banking Regulation Act, 1949, gives the Bank its powers to license, regulate and supervise banks and prescribes the statutory liquidity ratio, but it does not deal with the Committee. Option C, the Fiscal Responsibility and Budget Management Act, 2003, sets targets for the fiscal deficit and government debt, which is fiscal and not monetary policy, and it is the usual trap here. Option D, the Foreign Exchange Management Act, 1999, replaced the older foreign exchange law and governs transactions in foreign exchange.