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UPSC Prelims 2025 GS Paper 1, question 2

Topic: Economy

Q2

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.

  1. (a) I and II onlyCorrect answer
  2. (b) II, III and IV
  3. (c) I, III, IV and V
  4. (d) I, II and V

Solution.

Answer: (a) I and II only

  1. Items I and II are correct: according to the RBI Annual Report, the Reserve Bank of India's primary sources of income are interest and capital gains from buying and selling domestic Government bonds (open market operations) and returns/valuation gains from buying and selling foreign currency assets.
  2. Items III, IV and V are incorrect: the RBI does not manage public pension funds for fee income, does not lend directly to private commercial companies, and printing and distributing currency notes is a major head of expenditure (security printing and agency charges) for the RBI, not a source of income.