Civil Services Prep

Prelims 2021 · Economy · Question 1

Consider the following statements:<br/>1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.<br/>2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest.<br/>3. The Governor of the RBI draws his power from the RBI Act.<br/><br/>Which of the above statements are correct?

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer

1 and 3 only

1. Correct. The RBI Governor is appointed by the Central Government under the Reserve Bank of India Act, 1934.

2. Incorrect. The power of the Central Government to issue directions to the RBI in public interest comes from the RBI Act, 1934 (not from the Constitution), especially Section 7.

3. Correct. The RBI Governor’s office, powers and functions flow from the RBI Act, 1934.

Therefore, statements 1 and 3 only are correct.

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