Functions of RBI as a Central Bank :
– Issuing of Note : Central bank of a country has the exclusive monopoly right of issuing note.
– Bankers to the Government : Central Bank is a banker agent and financial advisor to the govt. As a banker to the government. As an agent to the govt. it buy and sell securities, treasury bills on the behalf of the Government.
– Bankers Bank : It is an Apex Bank of all banks in the country. The Central bank keeps some balance of the commercial bank as compulsory ***.
– Supervision of the Banks : As a bankers bank, the central bank also supervise the commercial bank.
– Lender of the Last Resort : When Commercial Banks fail to meet their Financial Requirement from other sources, they approach the Central Bank to give Loans and Advances as Lender of the Lest Resort.
– Custodian of Foreign Exchange : Central bank is the custodian of nation foreign exchange reserve.
– Clearing House Function : As Central Bank holds the Cash Reserve of all the Commercial Banks , it becomes easier and convenient for it to act as their Clearing House.
– Control of Credit : It is the most important function of central bank. It implies increase or decrease in the supply of money commercial bank.
– Collection of Statistics : Central bank collects statistical information relating to banking, currency and foreign reserve. This is useful in making policies and plans of growth and development.
