Question

Which of the following is/are the function(s) of central bank?

Options

• Banker’s bank

• Provides overdraft facility to the public.

• Receive deposits from the public and business firms.

• Provide short-term and medium-term loans to customers.

Answer 1

Banker’s bank

Explanation:

The Central Bank (such as the Reserve Bank of India) serves as a “Banker’s Bank” by regulating commercial banks, holding their statutory and providing financial assistance as a lender of last resort. The remaining possibilities are inaccurate since interacting with the general public, such as offering overdrafts, receiving daily deposits, and awarding short- or medium-term retail loans, is the primary function of commercial banks, not central banks.