Question

Name the institution which enjoys the monopoly of note issue. Explain the following functions of this institution:

1. Bankers Bank
2. Banker to the Government

Name the institution that enjoys the monopoly of note issue in India.

Answer 1

The central bank enjoys the monopoly of note issue.

1. Bankers Bank: The central bank acts as the banker for commercial banks. It maintains their cash reserves, offers financial help in times of emergency, and makes interbank transactions easier to clear and complete.
2. Banker to the Government: The central bank acts as a banker, agent, and financial consultant to the central and state governments. It maintains government accounts, receives and makes payments on their behalf, manages public debt, and offers interim financial aid when needed.

Answer 2

The Reserve Bank of India enjoys the monopoly of note issue in India.