What is the role of RBI as custodian of foreign exchange reserves?

The RBI acts as the custodian of the country’s foreign exchange reserves, manages exchange control and acts as the agent of the government in respect of India’s membership of the IMF. … The exchange control was so operated as to restrict the demand for foreign exchange within the limits of the available supplies of it.

What is the role of RBI in controlling foreign exchange reserves?

RBI has an important role to play in regulating & managing Foreign Exchange of the country. It manages forex and gold reserves of the nation. On a given day, the foreign exchange rate reflects the demand for and supply of foreign exchange arising from trade and capital transactions.

What do you mean by custodian of foreign exchange reserve?

In India, the RBI is the custodian of the country’s foreign exchange reserves. It buys and sells rupees as well as foreign currency in the foreign exchange market to maintain the stability exchange rate.

Which bank is the custodian of foreign exchange reserves in India?

The reserves are managed by the Reserve Bank of India for the Indian government and the main component is foreign currency assets. Foreign-exchange reserves act as the first line of defense for India in case of economic slowdown, but acquisition of reserves has its own costs.

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Is RBI maintain foreign exchange reserves?

RBI is the custodian of the Foreign exchange reserves in India. In 2020, India’s forex reserves crossed the $500-billion mark for the first time in history due to higher foreign direct investment, foreign institutional investment.

What is the role of RBI in Indian economy?

RBI formulates, implements and monitors the monetary policy. This policy is the most important tool that the RBI has. Using this policy RBI manages the interest rates offered by banks on loans and deposits and which affects the inflation and deflation in the country.

What is RBI function?

In the Indian context, the basic functions of the Reserve Bank of India as enunciated in the Preamble to the RBI Act, 1934 are: “to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to …

What is custodian of cash reserves?

It is on the basis of these reserves that the central bank transfers funds from one bank to another to facilitate the clearing of cheques. Thus the central bank acts as the custodian of the cash reserves of commercial banks and helps in facilitating their transactions.

Who is the custodian of Indian Constitution?

The Supreme Court is the custodian of the Constitution of India and the higher judiciary has played a crucial role in supporting the separation of powers, an important feature of our democracy.

Who is the custodian of monetary reserves in India *?

Reserve Bank of India ( RBI ) is the custodian of monetary reserve in India .

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Why was the SDR created?

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. … The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

How much reserve does RBI have?

RBI’s dollar reserves now stand at $608 billion, making India the fifth-largest reserve holding country in the world.