Question 1 - MCQ Questions (1 Mark) - Chapter 1 Class 8 Economics - Introduction to Banks - Economics

Last updated at April 16, 2024 by Teachoo

What is the name of the central bank of India that regulates and supervises the banking system?

Answer:

So, the correct answer is option (B): Reserve Bank of India .

The Reserve Bank of India (RBI) is the central bank of India, which means it is the bank of banks. It has many important functions, such as:

It issues currency notes and coins in India.
It controls the money supply and interest rates in the economy
It supervises and regulates the banking system and financial markets
It acts as a lender of last resort to banks and other financial institutions in case of emergency
It manages the foreign exchange reserves and external trade of India

Let’s check all the options and see why they are correct or not:

Option (A) State Bank of India - State Bank of India (SBI) is a public sector bank that is owned by the government of India. It is not the central bank, but one of the many banks that are regulated by the RBI. So, this is incorrect .
Option (B) Reserve Bank of India - Reserve Bank of India (RBI) is the central bank of India that has the authority and responsibility to oversee and manage the banking system and monetary policy of India. So, this is correct .
Option (C) Bank of India - Bank of India (BOI) is another public sector bank that is owned by the government of India. It is also not the central bank, but one of the many banks that are regulated by the RBI. So, this is incorrect .
Option (D) Central Bank of India - Central Bank of India (CBI) is yet another public sector bank that is owned by the government of India. It is also not the central bank, but one of the many banks that are regulated by the RBI. So, this is incorrect .

Thus, option (B) is correct .