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| 1. |
explain function of RBI |
| Answer» 1. Issue of Bank Notes:The Reserve Bank of India has the sole right to issue currency notes except one rupee notes which are issued by the Ministry of Finance. Currency notes issued by the Reserve Bank are declared unlimited legal tender throughout the country.2. Banker to Government:As banker to the government the Reserve Bank manages the banking needs of the government. It has to-maintain and operate the government’s deposit accounts.3. Custodian of Cash Reserves of Commercial Banks:The commercial banks hold deposits in the Reserve Bank and the latter has the custody of the cash reserves of the commercial banks.4. Lender of Last Resort:The commercial banks approach the Reserve Bank in times of emergency to tide over financial difficulties, and the Reserve bank comes to their rescue though it might charge a higher rate of interest. | |