Question

How does the evi supervise the functioning of banks. Why is this necessary ?

Answer 1

First of all I think evi does not supervises the work of banks.RBI supervises the works of banks.
1.RBI monitors the work and sees that the balanced of loans are kept in banks for day to day transactions.
2.RBI checks that the banks give loans to not just to profit making business and traders but also to small borrowers.
3.Periodically, banks have to give all details about lenders,borrowers, and interest rate at which they are giving loans to people.

It is necessary for securing public welfare. It avoids the banks to run the business with profits motive only . It also keeps a check on interest rate of credit facilities provided by bank.RBI makes sure that the loans from the banks are affordable and cheap.

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Answer 2

i)All the banks are required to maintain the minimum cash balance of their deposit receipt with RBI,i.e. Cash Reserve Ratio..
&RBI also monitors the cash balance position of the banks...
ii)The RBI sees that if the banks are giving the loans to only large industrialists and moneylenders or also to the small farmers ..
iii)The banks are req. to submit there records about bank balance , loans given, loans recollected, interest charged,etc...

These Checks and all are required to prevent the Collapse Of any bank..and to prevent from any loss...


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