Assertion (A): Central Bank is also known as the Bank of Issue.
Assertion (A): Central Bank is also known as the Bank of Issue.
Reason (R): Reserve Bank of India enjoys the sole monopoly of issuing currency.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True
Anurag Pathak Changed status to publish January 5, 2024
Ans – (a)
Explanation:-
Central Bank enjoys the sole monopoly of issuing currency. That’s why the central bank is also known as the bank of issue.
Currency Authority (or Bank of Issue):-
The Central Bank has the sole authority for the issue of currency in the country. In India, the Reserve Bank of India (RBI) has the sole right to issue paper currency notes (except one-rupee notes and coins, which are issued by the Ministry of Finance). The One Rupee note bears the signature of the Finance Secretary, while other currency notes bear the signature of Governor RBI.
All the currency issued by the Central Bank is its monetary liability, i.e., the Central Bank is obliged to back the currency with assets of equal value, to enhance the public confidence in paper currency.
Assets usually consist of gold coins, gold bullions, foreign securities, and domestic government’s local currency securities.
Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
Anurag Pathak Changed status to publish January 5, 2024
