The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following?

RBI Bankers' Bank Meaning

The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following?
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.

Select the correct answer using the codes given below:
A. 1 and 3 only
B. 2 and 3 only
C. 1, 2 and 3
D. 1 and 2 only
Answer: C. 1, 2 and 3

RBI Bankers' Bank

  • The Reserve Bank of India (RBI) is India's central banking institution, which controls the monetary policy of the Indian rupee.
  • The RBI plays an important part in the Development Strategy of the Government of India.
  • The RBI is an independent apex monetary authority which regulates banks and provides important financial services like storing of foreign exchange reserves, control of inflation, monetary policy report.
  • The bank is also active in promoting financial inclusion policy and is a leading member of the Alliance for Financial Inclusion (AFI).
  • The bank is often referred to by the name Mint Street.
  • The Reserve Bank of India (RBI) acts as a bankers' bank which implies:
  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.

Main Functions of the RBI

Main functions
  • Financial Supervision
  • Regulator and supervisor of the financial system
  • Managing of exchange control
  • Issue of currency
Due to the above functions, the Reserve Bank of India (RBI) acts as a bankers' bank

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