Question

Write an essay on the role of the central bank (reserve bank of india) in any economy with special reference to the indian scenario.

Answer 1

Here your answer

The central bank in a developing economy performs both traditional and non-traditional functions. The principal traditional functions performed by it are the monopoly of note issue, banker to the government, bankers’ bank, lender of the last resort, controller of credit and maintaining stable exchange rate.

The central bank in a developing country aims at the promotion and maintenance of a rising level of production, employment and real income in the country. The central banks in the majority of underdeveloped countries have been given wide powers to promote the growth of such economies. They, therefore, perform the following functions towards this end.

One of the aims of a central bank in an underdeveloped country is to improve its currency and credit system. More banks and financial institutions are required to be set up to provide larger credit facilities and to divert voluntary savings into productive channels. Financial institutions are localised in big cities in underdeveloped countries and provide credit facilities to estates, plantations, big industrial and commercial houses.

Answer 2

Reserve bank of India is considered to be the central authority for all the banks that are running in India.

The governor of the Reserve bank of India has the ability to approve or disapprove any kind of banks that are running under the country with proper reason.

If a group wants to start a bank in India then it should seek permission from the reserve bank India and one cannot start the bank without the approval of it.