You asked: What is custodian of foreign reserve?

The RBI acts as the custodian of the country’s foreign exchange reserves, manages exchange control and acts as the agent of the government in respect of India’s membership of the IMF.

Who is custodian of foreign reserves in India?

In substantive terms, the Reserve Bank functions as the custodian and manager of forex reserves, and operates within the overall policy framework agreed upon with Government of India.

What do you mean by custodian of foreign reserve function of central bank?

Custodian of foreign exchange reserves The Central Bank is the custodian of country’s stock of gold and international currencies. The Central Bank maintains the stability of exchange rate. All earnings in foreign exchange transactions are to be deposited with the Central Bank and are routed through it.

How central bank is custodian of foreign exchange?

The central bank controls both the receipts and payments of foreign exchange. 2. It tries to maintain stability of the exchange rate. For this purpose, it buys or sells foreign currencies in the market to minimise fluctuations in the foreign exchange rates.

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What do foreign reserves mean?

International reserves (or reserve assets in the balance of payments) are those external assets that are readily available to and controlled by a country’s monetary authorities. … A narrower definition for international reserves only includes foreign currency deposits and bonds.

Who is the custodian of Indian Constitution?

The Supreme Court is the custodian of the Constitution of India and the higher judiciary has played a crucial role in supporting the separation of powers, an important feature of our democracy.

Does RBI print money?

The Reserve Bank of India (RBI) prints and manages currency in India, whereas the Indian government regulates what denominations to circulate. The Indian government is solely responsible for minting coins. The RBI is permitted to print currency up to 10,000 rupee notes.

What are the supervisory functions of RBI?

The supervisory functions include giving license to banks along with their new branches, inspection of the assets and liabilities of the banks it regulates the financial position of the economy. It also issues directives and has the power to control Non- Bank Financial Institutions.

What is repo rate?

Definition: Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.

What is banker to government?

Banker to the government function is done by central banks like the RBI. … It holds custody of the cash balance of the government, gives temporary loans to both central and state governments and manages the debt operations of the central government.

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What is Fera?

The Foreign Exchange Regulation Act (FERA) was legislation passed in India in 1973 that imposed strict regulations on certain kinds of payments, the dealings in foreign exchange (forex) and securities and the transactions which had an indirect impact on the foreign exchange and the import and export of currency.

How foreign exchange reserve is maintained?

Foreign exchange reserves are assets held on reserve by a central bank in foreign currencies. These reserves are used to back liabilities and influence monetary policy. It includes any foreign money held by a central bank, such as the U.S. Federal Reserve Bank.

Who control the credit in India?

Credit control is an important tool used by Reserve Bank of India, a major weapon of the monetary policy used to control the demand and supply of money (liquidity) in the economy. Central Bank administers control over the credit that the commercial banks grant.

Which country has highest foreign exchange reserves?

Countries with the highest foreign reserves

Currently, China has the largest forex reserves followed by Japan and Switzerland. In July 2021, India overtook Russia to become the fourth largest country with foreign exchange reserves.

What happens when foreign reserves increase?

An increase in foreign exchange reserves raises both liquid and total debt, while shortening debt maturity. To the extent that foreign exchange reserve interest rates are low, increased foreign reserves will cause a permanent decline in consumption, as well as move labor from the non-tradable to the tradable sector.

What are reserves used for?

Reserves are often used to purchase fixed assets; to repay debts; or to fund expansions, bonuses, and dividend repayments. Although the IFRS Standards sometimes call provisions a ‘reserve’, they are not the same thing – a provision is an upcoming liability without a confirmed date or cost.

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