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Explain ‘banker to the government’ function of the central bank. |
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Answer» As government’s banker, central bank keeps the banking accounts of the government, both of the centre and of the states. As a banker, the central bank offers all those services to the government which a commercial bank offers to the general public. It accepts deposits from government departments as well institutions and operate their accounts on regular basis. It also collects cheques and drafts drawn on other banks in favour of the government. It also makes available cash for the payment of salaries, wages and other disbursements by the government. The central bank makes advances to the government to meet temporary demand, till taxes are collected or loans from the public arc raised. The government can also take extraordinary advances during a period of depression, war or emergency |
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