How does the Reserve Bank of India (RBI) supervise the functioning of bankes? Is it
necessary?
Or Credit also has a negative role which is more common in rural areas. Justity the 27
tatement.
Answers
Answer:
(i) It monitors the balance kept by banks for day-to-day transactions.
(ii) It checks that the banks give loans not just to profit-making businesses and traders but also to small borrowers.
(iii) Periodically banks have to give details about lending, borrowers and interest rate to RBI.
It is necessary for securing public welfare. It avoids the bank to run the business with profit 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.
Explanation:
Reserve Bank of India (RBI) supervised the banks in the following ways : (i) It monitors the balance kept by banks for day-to-day transactions. (ii) It checks that the banks give loans not just to profit-making businesses and traders but also to small borrowers.