Which of the following are the sources of income for the Reserve Bank of India?
I. Buying and selling Government bonds
II. Buying and selling foreign currency
III. Pension fund management
IV. Lending to private companies
V. Printing and distributing currency notes
Select the correct answer using the code given below:
Answer:
(d)
Easy
Core Books
Core Books/NCERT
Answer: (d) I, II and V Explanation: The Reserve Bank of India (RBI) earns income through: • I: Buying and selling government bonds in open market operations generates interest income, so this is correct. • II: Foreign exchange transactions (buying/selling currency) generate profits from exchange rate differences, so this is correct. • III: RBI does not manage pension funds; this is handled by other entities like PFRDA. Incorrect. • IV: RBI does not lend directly to private companies; it lends to banks and government. Incorrect. • V: The RBI is the sole issuing authority for currency notes in India. The income derived from currency issuance is known as “seigniorage,” which is the difference between the face value of the currency and the cost of producing and distributing it. This profit accrues to the central bank and is a source of income. Thus, I and II are correct, so (d) is the answer.