Question

RBI maintains foreign currency reserves under which function?

• A. Banker’s bank
• B. Credit control
• C. Custodian of foreign exchange
• D. Issue of currency notes

Answer 1

Answer:

C. Custodian of foreign exchange

RBI manages India’s foreign exchange reserves to ensure stability in the value of the rupee. It buys and sells foreign currencies in the market, regulates foreign exchange transactions, and maintains the balance of payments. This role helps in stabilizing the external value of the Indian currency.