How is central bank a banker’s bank ?
Answers
Answer:
Banker's Bank: The central bank is the bank for all the commercial banks in the country. The relations of central bank with other banks are similar to those of a bank with its customers. As a matter of legal obligation, the commercial banks have to keep certain portion of their deposits with the central bank as cash reserves. These cash reserves enable the central bank to exercise control of the issue of credits by the commercial banks, thereby keeping the entire credit-system. The central bank also allows the facility of short-term loans and discounting of the bills to the commercial banks and it also advises the other banks related to their business, like fixation of rate of interests on deposits and loan etc.
Answer:
Thus, the banks which have to supply banknotes for their customers (either over the counter or through automatic teller machines) obtain them from the central bank which has an issuing monopoly. ... The central bank debits their current accounts accordingly.