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.

“The following are the various sources of income of RBI: • The Foreign Currency Assets (FCA) are around 90% of the Forex reserves. This FCA RBI has invested in US govt. bonds and it earns interest on that. It has also deposited some FCA with other Central Banks.• When RBI purchase Indian Govt. bonds from the OMO, then it earns interest on the holding of govt bonds/securities• Lending at Repo rate to banks• RBI acts as 'Debt Manager' of Central Govt and State Govt for which it gets commission/income.• Seigniorage Economic capital is a measure of risk in terms of capital.”

“increased by the inflation index and the interest is offered on the increased principle. • Special Securities: Under the market borrowing program, the Government of India also issues, from time to time, special securities to entities like Oil Marketing Companies, Fertilizer Companies, the Food Corporation of India, etc. (popularly called oil bonds, fertiliser bonds and food bonds respectively) as compensation to these companies in lieu of cash subsidies.• Bank recapitalization bonds: Government of India has also issued Bank Recapitalisation Bonds to specific Public Sector Banks in 2018. (Discussed in detail in bank recapitalization)• Sovereign gold bonds (SGB): SGBs are unique instruments, prices of which are linked to commodity price viz Gold.”

“Notice that in the previous case, Rs 100 in reserves could support deposits of Rs 400. But the banking system would now be able to loan Rs 300 only. It would have to call back some loans to meet the increased reserve requirements. Hence, money supply would fall. Another important tool by which the RBI also influences money supply is Open Market Operations. Open Market Operations refers to buying and selling of bonds issued by the Government in the open market. This purchase and sale is entrusted to the Central bank on behalf of the Government. When RBI buys a Government bond in the open market, it pays for it by giving a cheque.”