Consider the following statements: ​ 1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government. ​ 2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest. ​ 3. The Governor of the RBI draws his power from the RBI Act. ​ Which of the above statements are correct? ​

The correct answer is C (1 and 3 only). Statement 1 is true: under Section 8 of the RBI Act, 1934, the Governor is appointed by the Central Government. Statement 3 is also true: the Governor's powers and functions come from the RBI Act, 1934, since the Constitution does not mention the RBI at all.

Statement 2 is wrong. No constitutional provision gives the Centre power to direct the RBI. The power comes from Section 7 of the RBI Act, which lets the Government, after consulting the Governor, issue directions in public interest. That is a statutory power, and it is the reason the RBI is often described as a statutory body, not a constitutional one. Aspirants often confuse this with constitutional bodies like the Election Commission or CAG, whose independence is written into the Constitution.

Core concept: the statutory versus constitutional status of regulators and the limits of central control over monetary institutions. This links well to Mains GS-III on the independence of regulators and the debate over the RBI's autonomy versus government direction, as seen in the 2018 episode of Section 7 being invoked.

Trap: Treating Section 7 powers as constitutional because they are so significant. Always check whether the source of a power is the Constitution or an Act of Parliament.