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    Question

    Which of the following is not true about RBI transacting

    Government business in India?
    A it is an obligation as well as right of the Bank to transact Government business in India. Correct Answer Incorrect Answer
    B Central Government shall entrust the Bank with the management of public debt. Correct Answer Incorrect Answer
    C Central government shall entrust the Bank with power to issue new loans for management of public debt. Correct Answer Incorrect Answer
    D the terms and conditions for transacting government business shall be determined by the RBI. Correct Answer Incorrect Answer
    E Any agreement made for transacting government business shall be laid before Parliament. Correct Answer Incorrect Answer

    Solution

    S. 20. Obligation of the Bank to transact Government business. S. 21. Bank to have the right to transact Government business in India. S. 21. Bank to have the right to transact Government business in India. (1) The Central Government  shall entrust the Bank, on such conditions as may be agreed upon, with all [its] money, remittance, exchange and banking transactions in India, and, in particular, shall deposit free of interest all [its] cash balances with the Bank: Provided that nothing in this sub-section shall prevent the [Central Government] from carrying on money transactions at places where the Bank has no branches or agencies, and the [Central Government] may hold at such places such balances as [it] may require. (2) The [Central Government] shall entrust the Bank, on such conditions as may be agreed upon, with the management of the public debt and with the issue of any new loans. (3) In the event of any failure to reach agreement on the conditions referred to in this section the [Central Government] shall decide what the conditions shall be. (4) Any agreement made under this section shall be laid, as soon as may be after it is made, before Parliament.

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