Why is Reserve Bank of India known as the custodian of foreign exchange?

The RBI acts as the custodian of the country’s foreign exchange reserves, manages exchange control and acts as the agent of the government in respect of India’s membership of the IMF. The exchange control was so operated as to restrict the demand for foreign exchange within the limits of the available supplies of it.

How RBI is custodian of foreign exchange reserves?

Foreign Exchange Reserves Management The Reserve Bank of India, is the custodian of the country’s foreign exchange reserves and is vested with the responsibility of managing their investment. The legal provisions governing management of foreign exchange reserves are laid down in the Reserve Bank of India Act, 1934.

What do you mean by custodian of foreign exchange reserve?

In India, the RBI is the custodian of the country’s foreign exchange reserves. It buys and sells rupees as well as foreign currency in the foreign exchange market to maintain the stability exchange rate.

Which bank is the custodian of foreign exchange reserves in India?

the Reserve Bank of India
The reserves are managed by the Reserve Bank of India for the Indian government and the main component is foreign currency assets. Foreign-exchange reserves act as the first line of defense for India in case of economic slowdown, but acquisition of reserves has its own costs.

Who is custodian of Constitution of India?

The Supreme Court is the custodian of the Constitution of India and the higher judiciary has played a crucial role in supporting the separation of powers, an important feature of our democracy.

How central bank is custodian of foreign exchange?

The central bank controls both the receipts and payments of foreign exchange. 2. It tries to maintain stability of the exchange rate. For this purpose, it buys or sells foreign currencies in the market to minimise fluctuations in the foreign exchange rates.

Who is the custodian of national reserves in international currency?

RBI is the custodian of the Foreign exchange reserves in India. In 2020, India’s forex reserves crossed the $500-billion mark for the first time in history due to higher foreign direct investment, foreign institutional investment. Low oil prices also helped reduce outflows.

Which is the custodian of foreign assets in India?

Security Exchange Board of India.

Who is the custodian of Contingency Fund of India?

the President of India
Accordingly, Parliament enacted the contingency fund of India Act 1950. The fund is held by the Finance Secretary (Department of Economic Affairs) on behalf of the President of India and it can be operated by executive action.

How does the central bank act as the custodian of foreign exchange reserve and exchange stability?

Which Act governs the foreign exchange management in India?

FEMA
The Central Government of India formulated an act to encourage external payments and across the border trades in India known as the Foreign Exchange Management Act. FEMA (Foreign Exchange Management Act) was introduced in the year 1999 to replace an earlier act FERA (Foreign Exchange Regulation Act).