Which of th following system is followed by the Reserve Bank of India for issuing currency?

Option 1 -> Under this system, a fixed proportion of gold and foreign securities must be maintained against total currency issued.

Option 2 -> RBI maintains a minimum reserve of gold and foreign exchange; rest can be in government securities and other approved assets.

Option 3 -> This is not a recognized system for currency issuance by central banks.

Option 4 -> Currency issued up to a fixed limit without backing; beyond that limit requires full backing by gold or foreign securities.

Hence, Option 2: Minimum Reserve System -> The Reserve Bank of India adopted the Minimum Reserve System in 1957. Under this system, RBI is required to maintain a minimum reserve of only ₹200 crores, of which at least ₹115 crores must be in gold and the rest in foreign securities. Against this minimum reserve, RBI can issue any amount of currency as per the requirement of the economy. This system provides flexibility to RBI in currency management and supports economic growth by ensuring adequate money supply. -> correct