Give reasons "As a banker to the government, the Central Bank transfers government funds".
Answers
Heya _____
Ans ____ As a banker to the government, the Central Bank transfers government funds". and the reason are as given _____
• Central bank is the banker to the govt....
• Government need to take the loans to cop up its deficits ...
• At that time a central bank as RBI in India gives the loan to govt...
Thank you
As a banker to the government, the Central Bank transfers government funds in case of deficits or when the government is in need of funds.
* In such circumstances, the government issues bonds which are purchased by the central bank( RBI).
* The central bank, in turn, provides the required sum of money to the government to help it cope up with its fiscal deficits.
* This is a form of money creation by the central bank.
* It also helps the government to run its operations, acts as a fiscal as well as settlement agent for the government.