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      Question

      Under Section 21 of the RBI Act, 1934, in the event of

      any failure to reach agreement on the conditions for transacting Government business, who decides what the conditions shall be?
      A The Reserve Bank Correct Answer Incorrect Answer
      B The Central Government Correct Answer Incorrect Answer
      C The Central Board Correct Answer Incorrect Answer
      D An arbitral tribunal Correct Answer Incorrect Answer
      E The Supreme Court Correct Answer Incorrect Answer

      Solution

      Section 21 gives the Bank the right to transact Government business in India, and the Central Government must entrust the Bank with all its money, remittance, exchange and banking transactions, depositing its cash balances free of interest. Under Section 21(3), in the event of any failure to reach agreement on the conditions, the Central Government shall decide what the conditions shall be. Any agreement made under the section must be laid before Parliament. Hence the Central Government decides the conditions.

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