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      Question

      Section 18 of the RBI Act, 1934 deals with which of the

      following powers of the Reserve Bank?
      A Power to issue bank notes Correct Answer Incorrect Answer
      B Power to supersede the Central Board Correct Answer Incorrect Answer
      C Power of direct discount Correct Answer Incorrect Answer
      D Power to collect credit information Correct Answer Incorrect Answer
      E Power to make regulations Correct Answer Incorrect Answer

      Solution

      Section 18 is titled 'Power of direct discount'. It applies when, in the opinion of the Bank, a special occasion has arisen making it necessary or expedient to act for regulating credit in the interests of Indian trade, commerce, industry and agriculture. In such cases the Bank may, notwithstanding limitations in Section 17, purchase, sell or discount bills and make loans or advances to State co-operative banks, co-operative societies or any other person. Thus Section 18 concerns the power of direct discount.

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