Question

The reserve bank of india (rbi) acts as a bankers' bank. What does it mean? (asked in upsc-pre-2012) 1) other banks retain their deposits with the rbi. 2) the rbi lends funds to the commercial banks in times of need. 3) the rbi advises the commercial banks on monetary matters. Answer codes: (a) 2 & 3 only (b) 1 and 2 only (c) 1 and 3 only (d) 1, 2 and 3

Answer 1

Option D--1, 2 and 3 is the correct answer.

The Reserve Bank of India (RBI) is the centralized bank of India and all the banking and monetary functions are controlled by it. It is called bankers' bank as all the banks of the country retain their deposits with it, it lends funds to the other  banks, enables smooth settlements of inter-bank transactions and advises the banks on monetary matters etc.