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Question
Give two major functions of the central bank of our country.
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Solution
The Reserve Bank of India’s key functions are:
- Monopoly of Note Issue.
- Banker, Agent, or Advisor to the Government.
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RELATED QUESTIONS
Explain the functions of the RBI with respect to the following:
- Custodian of foreign exchange reserves.
- Monopoly of note issue.
- Clearing house facility.
- Banker and fiscal agent to the government.
Assertion (A): Central bank as a banker to the government, works as a custodian of foreign exchange reserves.
Reason (R): The Central bank acts as a Clearing house for the transfer and settlement of mutual claims of commercial banks.

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Assertion (A): Central Bank acts as a banker to the Government.
Reason (R): Except the one rupee note, all other currency notes bear the signature of Governor of RBI.
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Assertion (A): Reserve Bank of India creates credit.
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