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Question
Identify the function of RBI as indicated by the following image.
Options
Banker to the banks
Fiscal agent to the government
Credit control
Custodian of foreign exchange reserve
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Solution
Credit control
Explanation:
The picture shows the RBI manipulating interest rates (raising it by 25 basis points), indicating the Reserve Bank of India's credit control function. The RBI regulates the money supply and controls inflation or deflation in the economy using credit control tools such as interest rate adjustments, reserve ratios, and open market operations.
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