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    Question

    What system does the Reserve Bank of India adhere to for

    the issuance of currency?
    A Proportionate system Correct Answer Incorrect Answer
    B Simple deposit system Correct Answer Incorrect Answer
    C Minimum reserve system Correct Answer Incorrect Answer
    D Fixed fiduciary issue system Correct Answer Incorrect Answer
    E Fractional reserve System Correct Answer Incorrect Answer

    Solution

    The Reserve Bank has the sole right to issue currency notes, except one rupee notes which are issued by the Ministry of Finance. The RBI follows a minimum reserve system in the note issue. Initially, it used to keep 40 percent of gold reserves in its total assets.

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