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CSEET · Economic and Business Environment · Key Government Institutions

Which statement about the Reserve Bank of India's role as banker to the Government is correct?

As banker to the Government, the RBI conducts its banking transactions and manages public debt, acting as agent of the Central and State Governments. It does not present the Budget, set tax rates or audit government accounts, which belong to the Finance Ministry, Parliament and the CAG.

  1. AIt manages public debt and conducts the Government's banking transactions, acting as its agentCorrect
  2. BIt prepares and presents the Union Budget in Parliament
  3. CIt audits the accounts of all Central Government departments
  4. DIt decides the rates of income tax each year

Explanation

The RBI acts as banker, agent and debt manager of the Central and State Governments, handling receipts, payments and the issue of government securities. Budget presentation and tax rates are for the Finance Ministry and Parliament, and audit of government accounts is done by the Comptroller and Auditor General.

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