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?
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only ✓ UPSC's answer
- (d) 1, 2 and 3
Why the answer is (c)
• Statement 1 is correct: under Section 8 of the RBI Act, 1934 the Governor and Deputy Governors are appointed by the Central Government.
• Statement 3 is correct: the Governor's powers flow from the RBI Act (and the Banking Regulation Act), not from the Constitution, which does not mention the RBI.
• Statement 2 is wrong: the power to give directions to the RBI in the public interest comes from Section 7 of the RBI Act, not from any constitutional provision; Section 7 has never been formally invoked.
• The RBI is thus a statutory, not a constitutional, body.
• Hence 1 and 3 only, option (c).
Why the other options are wrong
- (a) 1 and 2 only
- Statement 2 is wrong: the power to direct the RBI is statutory (Section 7), not constitutional.
- (b) 2 and 3 only
- Statement 2 is wrong; statement 1 is correct.
- (d) 1, 2 and 3
- Statement 2 is wrong, so all three cannot be correct.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2021, held on 10 October 2021. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.