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Questions
The Central Bank is the apex monetary institution of the country. Explain its role of a Banker of the Government.
Explain the following function of the central bank of a country.
Acting as a Banker to the Government.
Discuss the role of the Central Bank as the banker to the government.
With reference to the central bank of a country.
List two ways in which a central bank acts as 'Banker to the Government.
Explain the function of the Central Bank as a banker to the government.
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Solution
The central bank acts as a banker to the government both central as well as state governments in the following ways:
- As the government's banker, the central bank accepts receipts and makes payments. It also provides short-term loans to the government in times of difficulty.
- As a government agent, the central bank sells and purchases government securities and also manages public debt (national debt) and foreign debt.
- The central bank also acts as an advisor to the government, especially in monetary, banking, and financial matters.
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RELATED QUESTIONS
Which of the following is not a function of the Central Bank?
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.
The RBI settles claims of other commercial banks by a process of book entries. It helps to stabilize the banking system in the economy. Which function of the Central bank is explained here.
Which function of RBI is indicated by the above image?
The ______ is the central bank of our country which has the authority to print currency notes.
Which of the following statements are true?
- The Reserve Bank of India is the central bank of the country.
- All currency notes (except one rupee note) bear the signature of Governor, RBI.
- The objective of the Reserve Bank of India is to earn profit.
Identify the function of RBI as indicated by the following image.
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
Name the institution that enjoys the monopoly of note issue in India.
