10 Mar 2022

TNPSC Indian Economy – Reserve Bank of India

TNPSC Indian Economy – Reserve Bank of India:

Indian Economics questions are more important for the TNPSC Group 2 Prelims Exam. You will get 6 t0 8 marks from that Indian Economy portion. On this page, TNPSC Group 2, 2a, and Group 4 TNPSC Indian Economy Study Materials questions with answers are uploaded. Go through TNPSC Indian Economy Notes, Questions, and Answers below for the prelims exam.

Students who are preparing for the Group exam concentrate more on the maths part. you will easily score more marks in the Economics part. For students’ benefit, we upload TNPSC Indian Economy English and Tamil questions and answers in PDF for download. TNPSC aspirants can download and use it for the group prelims exam. kindly download TNPSC Indian Economy PDF given below:

Functions of Central Bank (Reserve Bank of India):


  1. Formed on April 1, 1935, in accordance with the RBI Act, 1934.
  2. Nationalized on January 1, 1949 (Fully owned by GOI).
  3. Headquarter moved from Calcutta to Mumbai in 1937.
  4. Osborne Smith was the first Governor of RBI.


  1. It is the Central Bank/Regulator for all banks in India.
  2. Also called “Lender of Last Resort”
  3. Governors and 4 Deputy Governors along with a central board of directors appointed by the GOI.


  1. Issues currency
  2. Banker to the government {It collects receipts of funds and makes payments on behalf of the government}
  3. Regulator of Indian Banking system
  4. Custodian of Forex
  5. Controller of credit

The process of issuing paper currency was started in the 18th century. Private Banks such as the bank of Bengal the bank of Bombay and the Bank of Madras – first printed paper money.

The first rupee was introduced by Sher Shah Suri based on a ratio of 40 copper pieces (paisa) per rupee. The name was derived from the Sanskrit word Raupya, meaning silver. Each banknote has its amount written in 17languages (English and Hindi on the front and 15 others on the back) illustrating the diversity of the country.

Commercial Banks:

  • These are the institutions that make short term loans to business and in the process create money

Credit Creation:

  • It means the multiplication of loans and advances. Commercial banks receive deposits from the public and use these deposits to give loans.

Non-Bank Financial Institution (NBFI):

  • It is a financial institution that does not have a full banking license or is not supervised by the central bank.

Central Bank:

  • It is an institution that manages a state’s currency, money supply, and interest rates. Central banks
    also usually oversee the commercial banking system.

Bank Rate:

  • It is the rate at which the Central Bank of a country is prepared to re-discount the first-class securities.

Statutory Liquidity Ratio (SLR):

  • It is the amount that a bank has to maintain in the form of cash, gold or approved securities.

Cash Reserve Ratio (CRR):

  • Banks are required to hold a certain proportion of their deposits in the form of cash with RBI. This is known as CRR.

Monetary Policy:

  • It is the macro-economic policy laid down by the Central Bank towards the management of money supply and
    interest rate.

Capital Market:

  • It is a financial market in which long-term debt or equity-backed securities are bought and sold.


  • It is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency.

Indian Economy – Reserve Bank of India Question and Answers:

Multiple choice questions:

1. A Bank is a
a) Financial institution   b) Corporate   c) An Industry  d) Service institutions

2. A Commercial Bank is an institutions that provides services
a) Accepting deposits b) Providing loans c) Both a and b  d) None of the above

3. The Functions of commercial banks are broadly classified into
a) Primary Functions b) Secondary functions c) Other functions d) a, b, and c

4. Bank credit refers to
a) Bank Loans  b) Advances c) Bank loans and advances d) Borrowings

5. Credit creation means.
a) Multiplication of loans and advances  b) Revenue  c) Expenditure  d) Debt

6. NBFI does not have.
a) Banking license b) government approval  c) Money market approval  d) Finance ministry approval

7. Central bank is the ————— authority of any country.
a) Monetary b) Fiscal c) Waged) National Income

8. Who will act as the banker to the Government of India?

9. Lender of the last resort is one of the functions of.
a) Central Bank b) Commercial banks c) Land Development Banks d) Co-operative banks

10. Bank Rate means.
a) Re-discounting the first class securities b) Interest rate  c) Exchange rate d) Growth rate

11. Repo Rate means.
a) Rate at which the Commercial Banks are willing to lend to RBI
b) Rate at which the RBI is willing to lend to commercial banks
c) Exchange rate of the foreign bank
d) Growth rate of the economy

12. Moral suasion refers.
a) Optimization b) Maximization  c) Persuasion   d) Minimization

13. ARDC started functioning from
a) June 3, 1963  b) July 3, 1963  c) June 1, 1963  d) July 1, 1963

14. NABARD was set up in.
a) July 1962  b) July 1972  c) July 1982  d) July 1992

15. EXIM bank was established in.
a) June 1982  b) April 1982  c) May 1982  d) March 1982

16. The State Financial Corporation Act was passed by
a) Government of India b) Government of Tamilnadu c) Government of Union Territories d) Local Government.

17. Monetary policy his formulated by.
a) Co-operative banks  b)Commercial banks  c) Central Bank  d) Foreign banks

18. Online Banking is also known as.
a) E-Banking b) Internet Banking  c) RTGS  d) NEFT

19. Expansions of ATM.
a) Automated Teller Machine  b) Adjustment Teller Machine  c) Automatic Teller mechanism  d) Any Time Money

20. 2016 Demonetization of currency includes denominations of
a) Rs.500 and Rs.1000  b) Rs.1000 and Rs.2000  c) Rs. 200 and Rs. 500   d) All the above


Leave a Reply

Your email address will not be published. Required fields are marked *