Question

discuss the following function of a central bank (a) government bank (b) banker bank ​

Answer 1

Answer:

(a) Governments bank: RBI or central bank acts as a banker, agent, and a financial advisor or the government. As a banker to the government it maintains the accounts of the government. As an agent it buys and sells securities on behalf of the government. As an advisor to the government, it frames policies to regulate money market.

(b)It performs the following functions: 1) As a bank for the government: As a banker, the central bank performs banking functions for the government as commercial banks performs for the public by accepting the government deposits and granting loans to the government.

Explanation:

Answer 2

a) Central bank functions as a banker to the government—both central and state governments. It carries out all banking business of the government. Central bank gives loans and advances to governments for temporary periods, as and when necessary and it also manages the public debt of the country

b) Central bank is the apex bank of all the commercial banks and financial institutions in the country. It holds the same relationship with the commercial banks as commercial bank holds with its customer. The central bank accepts deposits from the commercial banks and holds it as reserves for them.