Question

By regulating other financial institutions, the RBI aims to:

• A. Maximize profits for all banks
• B. Ensure the stability and health of the financial system
• C. Promote competition among banks
• D. Reduce the number of banks in the country

Answer 1

Answer:

B. Ensure the stability and health of the financial system

1. The RBI (Reserve Bank of India), as India's central bank, has the primary responsibility of maintaining financial stability

2. Through its regulatory function, RBI:
   

   • Monitors and supervises financial institutions

   • Sets prudential norms and guidelines

   • Ensures adequate capital requirements are met

   • Protects depositors' interests

   • Prevents systemic risks

   • Maintains overall financial system stability