The monetary policy of the Reserve Bank of India (RBI) is the cornerstone of the Indian financial system, shaping the economic landscape of the country. Since it has great importance, questions related to RBI Monetary Policy are often asked in banking and financial sector exams like SBI Clerk, IBPS PO, RBI Grade B, NABARD and others as well as in other competitive exams. RBI Monetary Policy not only tests the candidates’ knowledge of economic and banking concepts but also tests their awareness of current financial events. Through the given article, we have compiled RBI Monetary Policy questions asked in bank and other exams.
Why focus on RBI’s monetary policy?
RBI’s monetary policy tools, such as repo rates and CRR, directly influence lending rates, inflation and liquidity in the market. These concepts are tested to assess candidates’ understanding of economic policies, financial systems and their implications.
Types of questions asked related to monetary policy of RBI
Questions on RBI’s monetary policy generally fall into the following categories:
monetary policy tools
- Quantitative Tools: Repo Rate, Reverse Repo Rate, CRR, SLR, etc.
- Qualitative Tools: Moral incentives, credit rationing, etc.
Outline and Objectives
- Inflation Targeting (Flexible Inflation Targeting Framework)
- Monetary Policy Committee (MPC) and its functioning
RBI Regulations and Operations
- Open Market Operations (OMO)
- Marginal Standing Facility (MSF)
- Liquidity Adjustment Facility (LAF)
recent updates
- Changes in repo rates or inflation targets
- Major announcements in the monetary policy review
RBI Monetary Policy Questions Asked in Bank and Other Exams
Q1. What is repo rate?[IBPS Clerk 2022]
a) The rate at which RBI borrows money from banks
B) The rate at which RBI lends money to banks without security
c) The rate at which RBI lends money to banks against security
d) interest rates on inter-bank lending
Q2. What is the inflation target under India’s flexible inflation targeting framework?[RBI Grade B 2021]
A) 2%
B) 3% ± 1%
c) 4% ± 2%
d) 5% ± 1%
Q3. Which of the following is not a quantitative tool of monetary policy?[SBI PO 2020]
a) Cash Reserve Ratio (CRR)
B) Statutory Liquidity Ratio (SLR)
C) Open Market Operations (OMO)
d) moral motivation
Q4. When was the Monetary Policy Committee (MPC) constituted?[NABARD Grade A 2022]
A) 2014
B) 2015
c) 2016
d) 2017
Q5. What is the purpose of reverse repo rate?[IBPS SO 2020]
a) Increasing liquidity in the market
b) absorbing excess liquidity from the market
c) Stabilizing currency exchange rates
d) To promote credit growth in the economy
Q6. Who chairs the Monetary Policy Committee (MPC)?[IBPS RRB PO 2021]
A) Finance Minister
B) RBI Governor
c) Chief Economic Advisor
d) Finance Secretary
Q7. What is the maximum limit of Marginal Standing Facility (MSF)?[IBPS Clerk 2020]
A) 1% of net demand and time liabilities (NDTL)
B) 2% of NDTL
c) 4% of NDTL
d) no fixed limit
Q8. What does “Open Market Operations” (OMO) mean?[SBI Clerk 2021]
a) Selling foreign exchange reserves
B) Buying and selling of government securities by RBI
c) Issuance of new currency notes by RBI
d) Borrowing from RBI by commercial banks
Q9. Which committee recommended the adoption of inflation targeting in India?[RBI Grade B 2019]
(A) Urjit Patel Committee
(B) Rangarajan Committee
c) Nachiket Mor Committee
(d) Tarapore Committee
Q10. What is the tenure of external members of the Monetary Policy Committee (MPC)?[NABARD Grade A 2020]
A) 2 years
B) 3 years
c) 4 years
d) 5 years
Question 11. What is the current cash reserve ratio (CRR) in India? (According to the year of examination)[RBI Assistant 2021]
A) 3%
B) 4%
c) 5%
d) 6%
Question 12. What happens when RBI increases the repo rate?[IBPS PO 2021]
a) Liquidity increases in the economy
b) Liquidity in the economy decreases
C) lending rates decrease
d) inflation increases
Q13. Which of the following is a qualitative tool of monetary policy?[SBI PO 2019]
A) repo rate
B) credit rationing
c) cash reserve ratio
d) open market operations
Question 14. What is meant by bank rate?[IBPS Clerk 2020]
a) The rate at which banks lend to customers
B) The rate at which RBI lends long-term funds to banks
c) The rate at which RBI borrows from banks
d) none of the above
Question 15. What is the tenure of monetary policy review conducted by RBI?[SBI Clerk 2022]
A) monthly
B) quarterly
c) bimonthly
d) annually
Q16. Which of the following is the primary objective of monetary policy in India?[IBPS PO 2019]
A) price stability
B) economic development
c) full employment
d) balance of payments
Q17. What is the name of the committee that recommends monetary policy framework to the Reserve Bank of India (RBI)?[SSC CGL 2018]
A) Monetary Policy Committee (MPC)
B) Financial Stability and Development Council (FSDC)
c) Reserve Bank of India (RBI) Board
d) National Institute of Public Finance and Policy (NIPFP)
Question 18. Which of the following tools is used by RBI to control inflation?[RBI Grade B 2017]
A) Open Market Operations (OMO)
B) Cash Reserve Ratio (CRR)
c) Statutory Liquidity Ratio (SLR)
d) repo rate
Question 19. What is the name of the rate at which RBI lends money to commercial banks?[IBPS Clerk 2016]
A) repo rate
B) reverse repo rate
c) bank rate
d) Marginal Standing Facility (MSF) Rate
Q20. Which of the following is a result of tight monetary policy?[SSC CHSL 2015]
A) increase in aggregate demand
b) reduction in inflation
c) increase in unemployment
d) currency appreciation
Question 21. What is the name of the committee constituted by RBI to review the monetary policy framework?[RBI Assistant 2014]
(A) Urjit Patel Committee
b) Raghuram Rajan Committee
c) YV Reddy Committee
d) Bimal Jalan Committee
Question 22. Which of the following is a tool of monetary policy used by RBI to regulate money supply?[IBPS PO 2013]
A) Open Market Operations (OMO)
B) Cash Reserve Ratio (CRR)
c) Statutory Liquidity Ratio (SLR)
D. all of the above
Q23. What is the name of the rate at which commercial banks borrow money from RBI?[SSC CGL 2012]
A) repo rate
B) reverse repo rate
c) bank rate
d) Marginal Standing Facility (MSF) Rate
Question 24. Which of the following is a result of expansionary monetary policy?[RBI Grade B 2011]
a) Decrease in aggregate demand
B) increase in inflation
c) reduction in unemployment
d) depreciation of currency
| RBI Monetary Policy Questions Asked in Bank and Other Exams | |||
| Q. No. | Solution | Q.No. | Solution |
| 1. | C | 13. | b |
| 2. | C | 14. | b |
| 3. | D | 15. | C |
| 4. | C | 16. | A |
| 5. | b | 17. | A |
| 6. | b | 18. | D |
| 7. | b | 19. | A |
| 8. | b | 20. | b |
| 9. | A | 21. | A |
| 10. | b | 22. | D |
| 11. | b | 23. | C |
| 12. | b | 24. | b |
