UPSC Prelims 2021 Question:

Consider the following statements:

1. The Governor of the Reserve bank of India (RBI) is appointed by the Central Government. 
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest. 
3. The Governor of the RBI draws his power from the RBI Act.
   
   

Which of the above statements are correct?

Explanation:

• According to the Reserve Bank of India (RBI) Act, 1934, there shall be one Governor and not more than four Deputy Governors to be appointed by the Central Government on the central board of RBI. So, statement 1 is correct.
  
  
• According to the RBI Act, 1934:
  • The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider it necessary in the public interest. 
  • However, there are no such provisions mentioned in the Constitution of India. So, statement 2 is not correct.
  • The regulations made by the Central Board, the Governor and in his absence the Deputy Gover­nor nominated by him in his behalf, shall also have powers of general superintendence and direction of the affairs and the business of the Bank, and may exercise all powers and do all acts and things which may be exercised or done by the Bank.  So, statement 3 is correct.
    
    

Therefore, option (3) is the correct answer.

Relevance: The RBI Deputy Governor had warned the government against curbing the Central Bank's independence.

Subject: Economics | Money and Banking