What is the meaning of custodian of foreign exchange 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. … The exchange control was so operated as to restrict the demand for foreign exchange within the limits of the available supplies of it.

What is custodian of foreign exchange reserves?

The Reserve Bank of India, is the custodian of the country’s foreign exchange reserves and is vested with the responsibility of managing their investment. The legal provisions governing management of foreign exchange reserves are laid down in the Reserve Bank of India Act, 1934.

Who is the custodian of foreign exchange reserves of India?

In India, the Reserve Bank of India Act 1934 contains the enabling provisions for the Reserve Bank to act as the custodian of foreign reserves, and manage reserves with defined objectives.

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.

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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.

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.

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.

Which currency is SDR?

A basket of currencies defines the SDR: the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

SDR Currency Basket.

Currency Weights determined in the 2015 Review Fixed Number of Units of Currency for a 5-year period Starting Oct 1, 2016
Japanese Yen 8.33 11.900

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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How does a central bank act as custodian of exchange reserve?

Function 4 # Custodian of Foreign Balances:

It is the function of the central bank to maintain the exchange rate fixed by the government and manage exchange control and other restrictions imposed by the state. Thus, it becomes a custodian of nation’s reserves of international currency or foreign balances.

What is high powered money?

High powered money is the liability of the monetary authority of the country. This is also called the monetary base and is created by the RBI. High powered money includes currency (notes and coins), deposits with the government and reserves of commercial banks with RBI. So, to sum up, high powered money is. H = C + R.

What is important feature of Foreign Echange market?

The features of the foreign exchange market include it’s high liquidity, transparency, dynamism, 24 hour operation, low transaction cost, and a large bias towards towards the US dollar.

Who is the ex governor of RBI?

List of Governors of the Reserve Bank of India

No. Officeholder Term end
21 Y. Venugopal Reddy 6 September 2003
22 D. Subbarao 5 September 2008
23 Raghuram Rajan 4 September 2013
24 Urjit Patel 4 September 2016

Who prints the money?

The Federal Reserve Banks distribute new currency for the U.S. Treasury Department, which prints it.