1. Two reasons for the need of a central bank in a country: 

1. Central bank is extrusted with the responsibility of developing and promoting the banking system of the country. 

2. Central Bank is the fiscal agent, banker and advisor to the government.

2. Central Bank acts as a banker to the government: 

1. The government collects large sums of money through taxation. The government also spends equally large sums. 

2. RBI/Central bank revives the deposits of cash, cheques, drafts etc. from the government. It provides cash to the government for paying salaries and wages and other cash disbursements.

3. Open Market Operations: It is one of the most important quantitative instruments to control credit. It refers to the sale and purchase of government and other approved securities by the central bank in the money and capital market. When RBI aims at expansion of bank Credit during the period of recession, it purchases securities from the market and vice verse. This is how credit is controlled in both boom and condition of recession.