BANKING AFFAIRS

Detailed explanation-1: -This system is applicable in India since 1956. According to this system, the Reserve Bank of India has to maintain assets of at least 200 crore rupees all the times. Out of this 200 crore, the 115 cr rupee should in the form of Gold or gold bullion and rest 85 cr.

Detailed explanation-2: -The first 115 crore rupees should be in the form of gold or gold bullion, and the remaining 85 crore rupees should have been in the form of foreign currencies. Following the maintenance of the Minimum Reserve, the RBI may print an unlimited amount of currency notes to meet the needs of the economy.

Detailed explanation-3: -RBI follows Minimum Reserve System under which it issues currency in India. Under this policy, the minimum reserves to be maintained in the form of gold and foreign exchange should consist of rupees 200 crores. Out this reserve, the value of gold to be maintained is rupees 115 crores.

Detailed explanation-4: -Under the Minimum Reserve System(MRS), the RBI has to keep a minimum reserve of Rs 200 crore comprising of gold coin and gold bullion, and foreign currencies for note-issuing.