What is the function of reserve bank as a banker of banks ?
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:
It serves as the leader of the banking system and the money market. It regulates money supply and credit in the country. The RBI carries out India's monetary policy and exercises supervision and control over banks and non-banking finance companies in India.