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Which of the following statements related to the Reserve Bank of India (RBI) is/are true? Statements: I. RBI was established under the Reserve Bank of India Act, 1935. II. RBI maintains a current account of State Governments for keeping their cash balances. III. Sir Benegal Rama Rau was the longest serving governor of RBI.

Which of the following statements related to the Reserve Bank of India (RBI) is/are true? Statements: I. RBI was established under the Reserve Bank of India Act, 1935. II. RBI maintains a current account of State Governments for keeping their cash balances. III. Sir Benegal Rama Rau was the longest serving governor of RBI. Correct Answer II and III

The correct answer is Option 2.

Key Points

  • RBI (Reserve Bank of India) is the Central Bank of the country.  
  • It was set up on the basis of the recommendations of the Hilton Young Commission. 
  • It was established under the Reserve Bank of India Act, 1934.
  • The RBI Act, 1934 requires the Central Government to entrust the Reserve Bank with all its money, remittance, exchange and banking transactions in India and the management of its public debt.
  • All the State Governments are required to maintain a minimum balance with the Reserve Bank, which varies from state to state depending on the relative size of the state budget and economic activity.
  • RBI maintains a current account of State Governments for keeping their cash balances.
  • Sir Benegal Rama Rau, a member of the Indian Civil Service, was the longest serving Governor of the Bank from 1949 to 1957.

Additional Information

  • RBI commenced operations on April 1, 1935.
  • Its first Governor was Sir Osborne Smith.
  • The main purpose of creating RBI was to separate currency and credit from GoI.
  • RBI was nationalised in 1949 and its first Indian Governor was CD Deshmukh.
  • The headquarter of the RBI is in Mumbai.  

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