Question

Discuss the function of the Central Bank as ‘Banker, Agent and Advisor’ to the Government.

Explain the function of the Central Bank as ‘Banker, Agent, and Advisor’ of the Government.

Answer 1

The Central Bank functions as the banker to both the Central and State Governments. It receives government funds, makes payments on their behalf, and performs banking services, including exchange, remittance, and related operations. It provides the government with loans or credit during emergencies to meet financial needs. In addition, it serves as an agent for the purchase and sale of government securities and provides the government with financial advice on economic and monetary issues, including controlling inflation and deflation, currency devaluation or revaluation, deficit financing, and the balance of payments.