Skip to content

CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking

Which of the following is the function of the Reserve Bank of India that gives it the sole authority to issue currency notes of denominations above Rs 1 in India?

The function is the monopoly of note issue. The Reserve Bank of India alone issues currency notes above one rupee, which gives it central control over currency supply. Its other roles, such as banker to the government or lender of last resort, relate to different activities.

  1. ABanker to the government
  2. BMonopoly of note issueCorrect
  3. CLender of last resort
  4. DCustodian of foreign exchange reserves

Explanation

The RBI has the sole right to issue currency notes (other than one-rupee notes and coins, which are issued by the Government of India through the Ministry of Finance). This is called its monopoly of note issue. Banker to the government and lender of last resort are different functions and do not concern note issue.

Did you get it right without looking?

One question tells you little. A timed set on Money and Banking shows your real accuracy, how long you take and where you lose marks.

Practise Money and BankingFree diagnostic mock

More Money and Banking questions