Daily Current Affairs : 4-April-2024

On a sizable occasion, the Prime Minister addressed the opening rite of RBI@90 in Mumbai, celebrating ninety years of the Reserve Bank of India (RBI). This occasion highlights the RBI’s crucial position inside the Indian economic system and its adventure in view that its established order.

Brief History of the RBI

The records of the RBI dates again to the early twentieth century:

  • In 1926, the Royal Commission on Indian Currency, known as the Hilton Young Commission, encouraged the need for a important financial institution in India.
  • This concept turned into strengthened through the Indian Central Banking Enquiry Committee in 1931.
  • The RBI was officially founded in 1935 under the Reserve Bank of India Act, 1934, with Sir Osborne Smith as its first Governor.
  • In 1949, a prime trade came about when the RBI was nationalized, marking a new era for the organization.

Evolution of the RBI

Over the years, the RBI has evolved to adapt to the changing financial panorama. Today, it plays a vital function in numerous regions:

  • Inflation Targeting: The RBI makes a speciality of keeping charge stability to make certain monetary boom.
  • Foreign Exchange Reserves: It manages the us of a’s overseas forex reserves, which might be important for international trade.
  • Macroeconomic Stability: The RBI works to ensure average financial balance in India.
  • Reduction in Non-Performing Assets (NPAs): Efforts were made to limit NPAs in the banking quarter, improving financial health.
  • Technological Advancements: The RBI has embraced generation in payment structures, making transactions less complicated and faster.
  • Central Bank Digital Currency (CBDC): The RBI is exploring the introduction of a virtual forex, aligning with worldwide tendencies.

Challenges Ahead

Despite its achievements, the RBI faces several demanding situations that want attention:

  • Banking Regulation and Supervision: Ensuring strong guidelines for all banking entities.
  • Transparency: Improving communication and transparency with regulated establishments.
  • Fintech Regulation: Addressing the upward push of new-age fintech firms that require particular suggestions.
  • Limited Powers: The RBI has confined authority over public-zone banks, that can affect its effectiveness.
  • Fiscal Dominance: There is a risk of monetary rules overshadowing economic coverage, which can complicate monetary control.

Important Points:

Inauguration: The Prime Minister addressed RBI@90 in Mumbai, marking the 90th anniversary of the Reserve Bank of India (RBI).

Historical Background:

  • Recommended establishment of RBI by the Hilton Young Commission (1926) and the Indian Central Banking Enquiry Committee (1931).
  • Founded in 1935 under the Reserve Bank of India Act, 1934.
  • Sir Osborne Smith served as the first Governor.
  • Nationalized in 1949, marking a significant shift in its role.

Evolution and Role:

  • Focuses on Inflation Targeting to ensure price stability.
  • Manages Foreign Exchange Reserves for international trade.
  • Aims for Macroeconomic Stability in the Indian economy.
  • Works on reducing Non-Performing Assets (NPAs) in banks.
  • Embraces Technological Advancements in payment systems.
  • Exploring Central Bank Digital Currency (CBDC).

Current Challenges:

  • Need for effective Banking Regulation and Supervision.
  • Importance of Transparency with regulated entities.
  • Addressing the rise of Fintech Firms with appropriate regulations.
  • Limited authority over Public-Sector Banks affecting effectiveness.
  • Risks of Fiscal Dominance overshadowing monetary policy.

Why In News

The Prime Minister addressed the opening ceremony of RBI@90 in Mumbai, marking 90 years of the Reserve Bank of India (RBI), a celebration that underscores the bank’s vital role in shaping India’s financial landscape and economic development.

MCQs about RBI@90

  1. What year was the Reserve Bank of India (RBI) officially founded?
    A. 1926
    B. 1931
    C. 1935
    D. 1949
    Correct Answer: C. 1935
    Explanation: The RBI was officially founded in 1935 under the Reserve Bank of India Act, 1934.
  2. Which significant change occurred in the RBI’s history in 1949?
    A. It was established.
    B. It adopted inflation targeting.
    C. It was nationalized.
    D. It launched a digital currency.
    Correct Answer: C. It was nationalized.
    Explanation: In 1949, the RBI was nationalized, marking a pivotal moment in its institutional history.
  3. What is one of the primary focuses of the RBI today?
    A. Managing government debt
    B. Inflation targeting
    C. Directly controlling all public-sector banks
    D. Printing currency without limits
    Correct Answer: B. Inflation targeting
    Explanation: One of the RBI’s key roles today is focusing on inflation targeting to maintain price stability in the economy.
  4. Which of the following challenges does the RBI face?
    A. Complete independence from government influence
    B. Overseeing private-sector banks only
    C. Limited authority over public-sector banks
    D. Excessive foreign exchange reserves
    Correct Answer: C. Limited authority over public-sector banks
    Explanation: The RBI has limited authority over public-sector banks, which can affect its overall effectiveness in regulating the banking sector.

Boost up your confidence by appearing our Weekly Current Affairs Multiple Choice Questions

Loading