Daily Current Affairs Quiz: January 21, 2026

Statement 1 is correct: The RBI has the sole authority to issue India’s national currency notes (except one-rupee notes issued by the Government of India) under the RBI Act, 1934.

Statement 2 is incorrect: Managing foreign exchange and gold reserves is a core function of Central Banks, apart from acting as the banker to the government.

Statement 3 is correct: Central Banks prescribe reserve requirements (such as CRR, SLR) for commercial banks to regulate liquidity and ensure financial stability.

Statement 4 is incorrect: Central Banks do not engage in commercial lending; they function as regulators, monetary authorities, and lenders of last resort.

Retail banks offer a variety of services aimed at individuals and small businesses. These services include the issuance of credit cards, offering savings and checking accounts, and selling insurance products. While they do provide loans, retail banks typically do not offer large-scale corporate loans as those are the domain of commercial or investment banks.

Statement 1 is incorrect: Commercial banks can issue letters of credit, traveller’s cheques, and perform agency functions such as fund transfers, bill collection, and acting as trustees. These are well-established agency and general utility functions.

Statement 2 is correct: The primary function of commercial banks is to accept deposits from the public and lend these funds to individuals and businesses, earning income through the interest rate spread between deposits and loans.

Option [A] is correct: Increasing interest rates is a standard monetary policy tool used by the central bank (in India, the Reserve Bank of India) to control inflation. Higher rates make borrowing costlier, reduce consumption and investment, and thereby lower aggregate demand and price pressures.

Option [B] is incorrect: More government spending boosts demand, which can worsen inflation rather than control it.

Option [C] is incorrect: Lower taxes increase disposable income, raising demand and potentially fueling inflation.

Option [D] is incorrect: Lowering CRR/SLR allows banks to lend more, increasing money supply and demand which is again inflationary.

Statement 1 is correct: The MPC consists of six members as provided under the amended RBI Act, 1934.

Statement 2 is correct: Three members are from the Reserve Bank of India, including the Governor, who functions as the ex-officio Chairperson of the MPC.

Statement 3 is correct: The remaining three members are appointed by the Central Government, based on the recommendations of a Search-cum-Selection Committee.

Statement 4 is correct: Members appointed by the Central Government have a fixed term of four years