Practice Questions

Deputy Directors are part of the Central Board of Directors of the RBI.

They represent regional interests and provide inputs from the local boards of RBI.

They are not appointed solely by the RBI Governor 
, nor nominated only by the Finance Ministry , nor elected by shareholders .

Their inclusion ensures regional representation and expertise in the board’s decision-making.

Deputy Directors are part of the Central Board of Directors of the RBI.

They represent regional interests and provide inputs from the local boards of RBI.

They are not appointed solely by the RBI Governor (A), nor nominated only by the Finance Ministry (C), nor elected by shareholders (D).

Their inclusion ensures regional representation and expertise in the board’s decision-making.

The Central Board of Directors is the apex authority of the RBI.

It formulates and monitors the policies of the Reserve Bank, ensuring effective governance and financial stability.

It does not merely approve government policies  or directly supervise commercial banks 

It also does not appoint State Bank governors ; that is the prerogative of the Government of India.

This distinction is important for understanding RBI’s governance structure.

It only approves policies of the Government

The RBI Act, 1934 provided the legal framework for the establishment, governance, and functions of the Reserve Bank of India.

Under this act, the Central Board of Directors was created as the apex authority to oversee the bank’s management and policy decisions.

Other acts like the Banking Regulation Act, 1949 and Companies Act, 1956 deal with different aspects of banking and corporate governance, not the constitution of the RBI.

The RBI Governor is the chief executive of the Reserve Bank of India.

The Governor presides over the meetings of the Central Board, which is the apex authority of the RBI.

Deputy Governors and other directors assist the Governor, but the Governor leads the Board and is responsible for the overall functioning of the RBI.

RBI Governor serves as the chief executive of the bank and chairs the Central Board meetings.

While the Central Board is the apex authority for policy and governance, the Governor leads and coordinates its functioning.

Deputy Governors and other directors assist the Governor, but the Governor is the head of the Board.

The Central Board of Directors is the top decision-making body of the RBI.

It oversees policy formulation, management, and administration of the bank.

The RBI Governor acts as the chief executive, but the Central Board provides overall supervision and guidance.

Other bodies like the Monetary Policy Committee or Board of Supervision handle specific functions, but the Central Board is the apex authority.

The Central Board of Directors consists of both official and non-official Directors.

Among the non-official Directors, 10 are nominated by the Government of India to represent various sectors like agriculture, industry, commerce, and cooperative banking.

This ensures that the government has a significant role in guiding RBI policy while maintaining a balance with banking experts.

The RBI originally had four local boards in:

Mumbai (then Bombay)

Kolkata (then Calcutta)

Madras (now Chennai)

Delhi

Each local board nominates one Director to the Central Board, representing regional banking and economic interests.

The RBI has four local boards located in Mumbai, Kolkata, Chennai, and Kanpur.

Each local board nominates one Director to the Central Board of Directors.

These Directors represent regional interests and provide inputs on local banking and economic issues.

The Central Board of Directors is the top decision-making body of the RBI.

It consists of:

Governor, Deputy Directors, Directors from local offices, Directors and Government officials

Deputy Directors, Directors from local offices, Directors and Government officials

The term of office of the RBI Governor is 3 years, though it can be extended by 2 years by  Government of India. Maximum period 5 Years.

The RBI Governor is appointed by the Government of India.

However, the formal appointment letter is issued by the President, giving it official constitutional validity.

This ensures that the position has both executive approval and formal authority.

The RBI Governor is the highest executive authority of the central bank and is responsible for:

Formulating and implementing monetary policy

Regulating currency and credit

Supervising banks and financial institutions

Deputy Governors assist the Governor, but the Governor alone is the chief executive.

The RBI Governor is the chief executive of the central bank and is appointed by the Central Government.

The initial head office of the Reserve Bank of India (RBI) was located in Kolkata when it was established in 1935.Then shifted to Mumbai in 1937.

When the Reserve Bank of India was established in 1935, its emblem was modeled on the historic seal and mohur of the East India Company, which also featured a tiger.

This choice symbolized continuity in India’s banking and monetary system while reflecting authority and trust.

East India Company’s original seal and mohur

The RBI emblem consists of a tiger and a palm tree. ✅

Tiger: Symbolizes strength and authority.

Palm tree: Represents growth and prosperity.

So it is not a panther, and the correct pairing is Tiger and Palm Tree.

Initially (1935), RBI was set up as a shareholders’ bank.
The Reserve Bank of India (RBI) was nationalized on January 1, 1949, when the ownership of the RBI was fully transferred to the Government of India.
After independence, the RBI was nationalized to serve as a central bank fully owned by the government, giving it complete control over monetary policy and currency issuance.

The authorized capital is the maximum amount of capital that a company or bank is allowed to raise through the issuance of shares.
RBI was initially set up as a shareholders’ bank, so it had an authorized capital of ₹5 crore, divided into shares held by private shareholders.
(5 lakh share @rs 100 each)

The Reserve Bank of India (RBI) was initially established as a shareholders’ bank in 1935, with a paid-up capital contributed by private shareholders. It was not nationalized at the beginning; nationalization happened later in 1949.

The Reserve Bank of India (RBI) was established to serve as the central bank of India, following the recommendations of the Hilton Young Commission. To create the RBI, the RBI Bill had to be passed.

The RBI Bill was introduced and approved on March 6, 1934.

After the bill was passed, the Reserve Bank of India officially started functioning on April 1, 1935.

So, the distinction is:

Approval of the RBI Bill: March 6, 1934 ✅

RBI began operations: April 1, 1935

The Hilton Young Commission was appointed in 1926, and after examining India’s financial system, it submitted its report in 1927

The British government appointed the Hilton Young Commission in 1926 to examine India’s financial system and address the need for a central banking authority. Prior to this, India lacked a proper central bank to regulate currency and credit.

Karl Marx belongs to: German philosophers / Communist thinkers / Socialist theorists.

Karl Marx, the father of Marxist theory, argued that private property—particularly the means of production owned privately—was the root cause of social inequality and class struggle.He believed that abolishing private property would lead to a classless society and the end of exploitation.

When economic decision-making and activities are decentralized, local or smaller units of the economy can cooperate more efficiently.

Cooperation helps these decentralized units coordinate, share resources, and make better decisions in economic matters.

Communism combines political revolution with economic restructuring to achieve equality and eliminate class distinctions.

It comes from The Communist Manifesto (1848) by Karl Marx and Friedrich Engels.
The slogan calls on the working class (proletariat) across all countries to join together to overthrow capitalism and establish a classless, socialist society.
It reflects the idea of international solidarity among workers, which is a key principle of communism.

Karl Marx, the founder of communism, believed that the working class (proletariat) should seize political power from the capitalist class (bourgeoisie).
He advocated for the abolition of private ownership of major resources and means of production.
The goal was to ensure that wealth and resources are collectively owned and distributed according to need.
These principles are central to The Communist Manifesto (1848), co-authored by Marx and Engels.
This captures the core of Marx’s revolutionary and socialist philosophy.

Das Kapital (1867) was written by Karl Marx alone and analyzes the capitalist system in detail.

"The Communist Manifesto" was indeed published in 1848 by Karl Marx and Friedrich Engels, laying out the principles of communism and the call for the working class to challenge capitalist systems.

Both socialism and co-operation prioritize working together for the benefit of all rather than focusing on individual profit.

The concept of communism was introduced by Karl Marx and Friedrich Engels in the 19th century.
Karl Marx (1818–1883) developed the theory of historical materialism and class struggle, arguing that capitalism would eventually be replaced by communism.
Friedrich Engels (1820–1895) co-authored The Communist Manifesto (1848) with Marx, which outlined the principles of communism and the call for the working class to rise against capitalist systems.
So, communism as a formal ideology is largely credited to Marx and Engels.

Both communism and socialism aim to reduce or eliminate class distinctions by promoting collective ownership or control of resources and more equitable distribution of wealth.

B) Wealth concentration – Incorrect; both oppose wealth being concentrated in a few hands.

D) Private ownership – Incorrect; both limit or abolish private ownership of major resources.

C) Free market – Incorrect; both favor regulation or collective planning over a purely free market.

In communism, production is organized to satisfy the needs of all members of society, rather than to generate profit or respond to market competition.

Communism emphasizes cooperation among members of society. Resources and production are shared collectively to meet everyone’s needs, rather than competing for profit.

Communism aims to create a classless society where wealth and resources are shared collectively, eliminating distinctions between rich and poor.
Capitalism – Features class distinctions based on private ownership and wealth.
Socialism – Reduces inequality but does not fully eliminate class differences.
 Mixed economy – Combines private and public ownership; class distinctions still exist.

Communism advocates that the major means of production—like factories, land, and natural resources—should be owned collectively or by the state to eliminate class distinctions and ensure equitable distribution.

Communism aims to create a classless society where all people have equal access to resources and wealth, eliminating the divisions between rich and poor.

Communism emphasizes cooperation among members of society rather than competition. The idea is to work collectively for the common good, with resources and production shared to meet everyone’s needs.

Communism advocates for state or collective ownership of major means of production (like factories, land, and resources) to eliminate class distinctions and ensure equitable distribution.

Communism seeks to overthrow capitalism and replace it with a classless, stateless society through revolutionary means rather than relying on gradual reforms or market forces.

Communism promotes centralized or collective control over all major means of production to ensure equality and meet societal needs.

Communism seeks a classless, stateless society with collective ownership and need-based distribution. Critics say it’s hard to implement because centralized planning is inefficient, removing private incentives lowers productivity, and maintaining equality is difficult.

More of an ideology than a practicable system

Classical communism, as advocated by Karl Marx and others, supports the idea that capitalism must be overthrown, often implying revolutionary means, to establish a classless, stateless society.

The main goal of communism is to create a classless society where wealth and resources are shared collectively, eliminating social and economic inequalities.

Communism aims to distribute wealth according to individual needs rather than contributions, profits, or market forces. The principle is often summarized as: “From each according to his ability, to each according to his needs.”

In communism, the major means of production—like factories, land, and resources—are owned collectively by society rather than by private individuals or corporations. This is intended to ensure equality and eliminate class distinctions.

Communism can be seen as an extreme form of socialism because it seeks complete collective ownership, elimination of private property, and a classless society. It goes further than typical socialism in its goals and implementation.

Challenger App

No.1 PSC Learning App