Explain any three functions of the reserve Bank of India
Answers
Answer:
1. Issue of Notes —The Reserve Bank has the monopoly for printing the currency notes in the country. It has the sole right to issue currency notes of various denominations except one rupee note (which is issued by the Ministry of Finance). The Reserve Bank has adopted the Minimum Reserve System for issuing/printing the currency notes. Since 1957, it maintains gold and foreign exchange reserves of Rs. 200 Cr. of which at least Rs. 115 cr. should be in gold and remaining in the foreign currencies.
2. Banker to the Government–The second important function of the Reserve Bank is to act as the Banker, Agent and Adviser to the Government of India and states. It performs all the banking functions of the State and Central Government and it also tenders useful advice to the government on matters related to economic and monetary policy. It also manages the public debt of the government.
3. Banker’s Bank:- The Reserve Bank performs the same functions for the other commercial banks as the other banks ordinarily perform for their customers. RBI lends money to all the commercial banks of the country.
Explanation:
The Reserve Bank of India (RBI) is an important financial institution in India that controls the entire banking gadget of the country. It serves as a banker to the government and manages the forex reserves.
Functions of the Central financial institution (RBI):
1. Bank of issuing notes:
RBI has the exceptional right of issuing notes. This is referred to as the Currency Authority function of the critical financial institution. The notes issued by the critical financial institution are a vast legal tender.
2. Lender of the remaining banks:
If an industrial financial institution fails to get financial accommodation from anywhere, it approaches the imperative bank as a closing resort. RBI advances loans to this sort of bank towards authorized securities.
3. Custodian of forex:
RBI is the custodian of the country's forex reserves. It exercises 'controlled floating' to ensure the steadiness of the exchange charge inside the money market.
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