Question

In a developing economy like India, which of the following is an important developmental role of the central bank?

Options

• Fixing the salaries of all bank employees

• Promoting and developing financial institutions and supporting priority sectors

• Conducting only foreign trade

• Preparing the Union Budget

Answer 1

Promoting and developing financial institutions and supporting priority sectors

Explanation:

The central bank helps development by promoting banking, creating institutions like NABARD/IDBI, stabilising foreign exchange, and supporting sectors such as agriculture and small industry.