Question

Under the Proportional Reserve System in India, what percentage of notes was backed by gold and foreign assets?

• A. 20%
• B. 30%
• C. 40%
• D. 50%

Answer 1

Answer:

C. 40%

The system required that 40% of the currency notes in circulation be backed by gold and approved foreign assets, while the remaining could be backed by government securities. This ensured a balance between currency stability and flexibility in note issuance.