What ways does the RBI supervises the functioning of the Bank? Give one way why is it necessary?
Answers
The RBI supervises the functioning of banks in this manner -
1) It sees whether the banks are maintaining a minimum cash balance of the deposits.
2) It makes sure that people from all backgrounds receive loans and not only the rich, powerful businessman and traders.
3) The above point is made sure by periodical statements given by the banks to the RBI that contains information about to whom the bank has given loan, at which interest the loan was given,etc.
This is necessary so as to maintain equality of who receives the loans. Our aim is that all industries should grow. Even the small scale industries should be given the advantages of loans . As a result, the country's economy will also grow.
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Answer:
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.
(iii) Periodically banks have to give details about lending, borrowers and interest rate to RBI.
(iv) 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.