UPSC Previous Year Question | Prelims GS | 2021

Consider the following statements: 1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government. 2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest. 3. The Governor of the RBI draws his power from the RBI Act. Which of the above statements are correct?

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer

Correct Answer

1 and 3 only

Explanation

Statement 1 is correct: under the RBI Act, 1934, the Governor is appointed by the Central Government. Statement 2 is incorrect: the power to issue directions to the RBI in public interest (after consulting the Governor) comes from Section 7 of the RBI Act, not from the Constitution. Statement 3 is correct: the Governor's powers derive from the RBI Act, 1934.

Topics: banking & monetary policy, economy, governor's appointment & section 7 rbi act directions, reserve bank of india