Question

__________________ issues currency notes on behalf of the Central Government.

Answer 1

Answer: The correct answer is Reserve Bank of India (RBI)

• On behalf of the Government of India, the Reserve Bank of India (RBI) issues currency notes.
• No other organisation or individuals are allowed to issue currency notes, as per the laws of India.
• Reserve Bank of India is not only responsible for supply and issue of Indian rupee, but RBI is also responsible for regulating the Indian Banking System.

Reserve Bank of India Monitors Banks – Other Important Function

Apart from issuing currency notes on behalf of the Central Government, Reserve Bank of India plays an important role in the functioning of Banks in India.

• Reserve Bank of India (RBI) makes sure that banks not only provide loans to traders and profit making businesses but also to small borrowers, small scale industries and small cultivators.
• This monitoring done by the Reserve Bank of India (RBI) is necessary because for the development of the nation, cheap and affordable credit is a necessity.
• Usually the poor have to depend on informal sources of credit and it is the richer households who receive formal credit.
• Most loans from informal lenders do very little to increase the income of borrowers as they carry a very high interest rate.
• To make sure that the poor can benefit from the cheaper loans, it is important that the formal credit is distributed more equally, hence Reserve Bank of India (RBI) plays a vital role.

Reserve Bank of India – Important Points

• The Reserve Bank of India is the Central Bank of India.
• It functions under the Ministry of Finance.
• Reserve Bank of India was established on 1st April, 1935.
• It is headquartered in Mumbai.
• The Reserve Bank of India provides emergency advances to the Banks, and RBI is also known as Banker’s Bank.