Question

Given below are two statements:
Statement (I): Agricultural Credit Review Committee, 1989 was set up by RBI under the chairmanship of A.M Khusro.
Statement (II): Repo rate is the rate at which RBI borrows money from banks. In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

Repo rate: RBI lends to banks; Reverse repo rate: RBI borrows from banks. Khusro led the 1989 Agricultural Credit Committee.

Answer 1

The Correct Option is C

Statement (I) is correct: The Agricultural Credit Review Committee, established in 1989 by the Reserve Bank of India (RBI), was chaired by A.M. Khusro to evaluate and recommend improvements to agricultural credit systems in India. Statement (II) is incorrect: The repo rate is the interest rate at which the RBI lends money to commercial banks for short-term needs, not the rate at which the RBI borrows from banks. The rate at which the RBI borrows from banks is called the reverse repo rate. Thus, option (3) is correct, as Statement (I) is true, but Statement (II) is false.

Answer 2

Checking each statement against its defining feature:
For Statement (I), the identifying detail to verify is the committee's chairperson: the Agricultural Credit Review Committee of 1989 is specifically remembered for being chaired by A.M. Khusro, and this detail matches, so Statement (I) holds.
For Statement (II), the identifying detail is the direction of the transaction implied by repo rate is the rate at which RBI borrows money from banks. Repo agreements under this rate always flow from the RBI to banks, i.e. the RBI lends against securities and later repurchases them, not the reverse. A rate describing RBI borrowing from banks is instead the reverse repo rate, so Statement (II) fails this direction check.
Since (I) passes and (II) fails, option (3) is correct.