BANKING AFFAIRS

Detailed explanation-1: -The Reserve Bank of India, is the custodian of the country’s foreign exchange reserves and is vested with the responsibility of managing their investment. The legal provisions governing management of foreign exchange reserves are laid down in the Reserve Bank of India Act, 1934.

Detailed explanation-2: -The Reserve Bank of India Act, 1934 provides the overarching legal framework for deployment of reserves in different foreign currency assets and gold within the broad parameters of currencies, instruments, issuers and counterparties.

Detailed explanation-3: -The correct answer is Reserve Bank of India.

Detailed explanation-4: -In June 2021, India’s foreign exchange reserves crossed the US$600 billion mark for the first time. India’s total forex reserves touched an all time high of US$642.453 billion on 8 September 2021. The reserves declined to $575.3 billion by 3 February 2023.

Detailed explanation-5: -In brief, official reserves are held for precautionary and transaction motives keeping in view the aggregate of national interests, to achieve balance between demand for and supply of foreign currencies, for intervention, and to preserve confidence in the country’s ability to carry out external transactions.