Question

The following are the statements on RBI's role on foreign exchange management. Identify the wrong statement.

• A. Rules on Current Account transactions are notified by the RBI
• B. Specifying conditions for payment on Capital Account transactions
• C. Provide licence as 'Authorised Person' to deal in foreign exchange
• D. Giving guarantee or surety where foreign exchange transaction is involved

Answer 1

Answer:

D. Giving guarantee or surety where foreign exchange transaction is involved

RBI's role in foreign exchange management includes: A) Notifying rules on Current Account transactions, as per the Foreign Exchange Management Act (FEMA). B) Specifying conditions for payment on Capital Account transactions, as per FEMA. C) Providing licenses to 'Authorised Persons' (banks, money changers, etc.) to deal in foreign exchange. However, giving guarantees or surety for foreign exchange transactions is not a direct role of RBI. This function is typically performed by banks and other financial institutions. RBI's primary functions related to foreign exchange management include: 1. Regulating foreign exchange transactions. 2. Maintaining exchange rates. 3. Managing foreign exchange reserves. 4. Supervising authorized persons.