Which of the following is TRUE regarding the role of the Reserve Bank of India (RBI) in the Call Money and Notice Money Markets?

hard Q10 of 15

Financial Awareness - Risk, Stability & Emerging Finance

ARBI directly sets the interest rates in these markets

BRBI only intervenes in the Notice Money Market, not the Call Money Market

CRBI has no role in these markets as they are unregulated

DRBI regulates and monitors these markets to ensure liquidity and stability

Step-by-Step Solution

Step 1: Understand RBI's role in money markets
RBI regulates and monitors money markets including Call and Notice Money Markets to maintain liquidity and financial stability.
Step 2: Analyze options
RBI does not directly set interest rates but influences liquidity through monetary policy tools; it regulates both markets.
Step 3: Explain incorrect options
RBI does have a role, so 'no role' is incorrect; it intervenes in both markets, not only Notice Money Market.
Final Answer:
RBI regulates and monitors these markets to ensure liquidity and stability → Option D
Quick Check:
RBI role in Call and Notice Money Markets = regulation and monitoring ✅

Quick Trick: RBI ensures smooth functioning, not direct rate setting.

Common Mistakes:

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