Which statement correctly identifies RBI's role?

Which statement correctly identifies RBI's role?

• A. The European Central Bank
• B. India's central bank and regulatory body
• C. A private commercial bank in India
• D. The Indian stock exchange regulator

Answer: (B)

RBI is India's central bank and regulatory body for the financial system. As the central bank, it guides monetary policy to influence inflation and growth, issues currency, and serves as a lender of last resort to banks. As the regulator, it licenses and supervises banks and many financial institutions, sets prudential rules, and oversees payment systems to keep financial markets stable and functioning smoothly. This combination—acting as the main monetary authority and as the supervisor of banks and the broader financial sector—is what defines RBI’s role. The other options point to institutions with different scopes: the European Central Bank governs the euro area, a private commercial bank isn’t a regulator, and the Indian stock exchange regulator (SEBI) oversees securities markets rather than the banking system.

RBI is India's central bank and regulatory body for the financial system. As the central bank, it guides monetary policy to influence inflation and growth, issues currency, and serves as a lender of last resort to banks. As the regulator, it licenses and supervises banks and many financial institutions, sets prudential rules, and oversees payment systems to keep financial markets stable and functioning smoothly. This combination—acting as the main monetary authority and as the supervisor of banks and the broader financial sector—is what defines RBI’s role. The other options point to institutions with different scopes: the European Central Bank governs the euro area, a private commercial bank isn’t a regulator, and the Indian stock exchange regulator (SEBI) oversees securities markets rather than the banking system.