Which of the following are the sources of income for the Reserve Bank of India?I.Buying and selling Government bondsII.Buying and selling foreign currencyIII.Pension fund managementIV.Lending to private companiesV.Printing and distributing currency notesSelect the correct answer using the code given below:

1. A

   I and II only

   I and II only. RBI earns from dealing in government bonds and from buying and selling foreign currency while it manages reserves.

2. B

   II, III and IV

   II, III and IV. Drops G-secs, and keeps pension management and lending to private firms, which are not RBI income lines.

3. C

   I, III, IV and V

   I, III, IV and V. The trap bundle: pension funds, private-company lending and note-printing are not RBI income sources.

4. D

   I, II and V

   I, II and V. Correctly keeps bonds and forex, but treats printing and distributing notes as income. Printing is a cost of the issue function.

Summary. Official Set A key is (a) I and II only. The Reserve Bank’s surplus comes mainly from interest and trading on its government-security portfolio and from foreign-exchange assets (and from some fee income). Open-market operations mean it buys and sells G-secs — that is income-related (I). Reserve management means it buys and sells foreign currency and earns on the foreign portfolio (II). It does not run pension funds; NPS sits with PFRDA and fund managers (III). It is banker to banks and the government, not a commercial lender to private companies (IV). Printing and distributing notes is an expense of currency issue; seigniorage is from issuing money, not from the printing press (V). So only I and II are sources of income.