Social Science (087) — CBSE Class 10 board question

The Reserve Bank of India (RBI) plays the following roles in the Indian economy:

1. Issues currency: RBI issues currency notes on behalf of the Central Government, regulating money supply in the economy.

1. Supervises banks: RBI monitors that banks maintain a minimum cash balance from deposits received, ensuring banks remain capable of meeting withdrawal demands.

1. Regulates lending: RBI ensures banks lend not only to profit-making businesses but also to small cultivators, small-scale industries, and small borrowers.

1. Monitors credit information: Banks must periodically submit information to the RBI on how much they are lending, to whom, and at what interest rate.

Source: Money and Credit, Formal Sector Credit in India

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• This question is directly linked to Exercise Q.8: "In what ways does the Reserve Bank of India supervise the functioning of banks?"
• Examiners expect 3 distinct points for 3 marks — one point per mark.
• Avoid vague statements like "RBI controls the economy." Be specific: cash balance, lending to priority sectors, and periodic reporting.
• The key phrase from the textbook is "supervises the functioning of formal sources of loans" — use it or paraphrase it in your opening line.