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 RBI can accept deposits from the central and state governments without interest. It can purchase and discount bills of exchange from commercial banks. It can purchase foreign exchange from banks and sell it to them. It can provide loans to banks and state financial corporations.

Detailed explanation-3: -The RBI can accept interest-free deposits from the federal and state governments. It has the ability to buy and sell bills of exchange from commercial banks. It has the ability to buy and sell foreign currency through banks. It has the ability to lend to banks and state-owned financial institutions.

Detailed explanation-4: -The Reserve Bank of India Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank, which commenced operations on April 1, 1935. * To operate the credit and currency system of the country to its advantage.

Detailed explanation-5: -(1) A bank to be called the Reserve Bank of India shall be constituted for the purposes of taking over the management of the currency from the 1[Central Government] and of carrying on the business of banking in accordance with the provisions of this Act.