Question

With the help of an example, explain the clearing house functions of RBI.

Explain the work of "banker's clearing house."

Answer 1

1. The Reserve Bank of India (RBI) operates as a clearing house, allowing for the efficient and secure settlement of interbank transactions.
2. For example, if a customer from Bank A sends a cheque to a customer from Bank B, the RBI acts as a go-between to ensure that the cheque amount is deducted from Bank A and credited to Bank B.
3. The RBI clears and settles the transaction, ensuring that interbank fund transfers occur smoothly and on time.