In India currency notes are issued by the Reserve Bank of India RBI which is the monetary authority ...........

Economics (CUET) Money and banking

In India currency notes are issued by the Reserve Bank of India (RBI) which is the monetary authority of India. However, coins are issued by the government of India. Apart from currency notes and coins, balance in savings or current account deposits held by the public in commercial bank is also considered money. Since cheques drawn on these accounts are used to settle transaction such deposits are called demand deposit. They are payable by the bank on demand. Other deposits, eg. fixed deposits, have a fixed period of maturity and are therefore referred to as time deposit.
Who among the following is responsible for controlling money supply in the economy ?
(1)Commercial banks
(2)Government of India
(3)Ministry of Finance
(4)Reserve Bank of India

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Explanation:

- The Reserve Bank of India (RBI) is the central bank and monetary authority of India. It is responsible for controlling the money supply through various instruments like repo rate, reverse repo rate, and open market operations.

- Commercial banks play a role in the money supply by lending and creating demand deposits, but they do not control it. They operate under the regulations set by the RBI.

- The Government of India issues coins, but it does not control the entire money supply.

- The Ministry of Finance is involved in the fiscal policy but not directly in controlling the money supply, which is primarily the RBI's responsibility.

Answer: Option 4 - Reserve Bank of India