In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?(write 5 short points)
Answers
Answer:
The Reserve Bank of India monitors the amount of money that banks loan out, and also the amount of cash balance maintained by them. It also ensures that banks give out loans not just to profiteering businesses but also to small cultivators, small-scale industries and small borrowers. Periodically, banks are supposed to submit information to the RBI on the amounts lent to whom and at what rates of interest.
This monitoring is necessary to ensure that equality is preserved in the financial sector, and that small industries are also given an outlet to grow. This is also done to make sure that banks do not loan out more money than they are supposed to, as this can lead to situations like the Great Depression of the 1930s in the USA, which greatly affected the world economy as well.
Explanation:
Banks need to submit the proofs of the loans given and it is necessary because rbi has to make sure that the bank offers loans to all sections of people