Which of the following are the sources of income for the Reserve Bank of India?
- I.Buying and selling Government bonds
- II.Buying and selling foreign currency
- III.Pension fund management
- IV.Lending to private companies
- V.Printing and distributing currency notes
Select the correct answer using the code given below.
Show answer
Answer: A. Statement I is correct: RBI earns interest and trading gains on government securities through open market operations. Statement II is correct: RBI earns from its foreign exchange operations and foreign currency assets. Statement III is wrong: pension funds are regulated by PFRDA, and RBI does not earn from managing them. Statement IV is wrong: RBI does not lend to private companies. Statement V is wrong: printing notes is a cost for RBI, not an income source. So only I and II.
Watch for: Printing currency sounds like 'making money', but for RBI printing is an expense; its income is the interest earned on assets it holds.
Why the other options are wrong
- B. Wrong because III and IV are not RBI income sources.
- C. Wrong because III, IV and V are not RBI income sources.
- D. Wrong because printing currency notes is an expense for RBI, not income.
Source to check: RBI Annual Report (Income and Expenditure section); RBI website
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.