Economy2012
The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following?
- Other banks retain their deposits with the RBI.
- The RBI lends funds to the commercial banks in times
- The RBI advises the commercial banks on monetary
matters. Select the correct answer using the codes given below:
Explanation
The Reserve Bank of India (RBI) serves as a bankers' bank, which is reflected in all three statements. Firstly, other banks maintain deposits with the RBI, allowing it to regulate the availability of money. Secondly, the RBI acts as a lender of last resort, providing financial support to commercial banks when they face liquidity shortages. Lastly, it offers guidance on monetary policy and banking regulations, ensuring overall stability in the financial system. This multifaceted role is essential for maintaining confidence in the banking sector and managing economic stability, aligning with key principles covered in standard UPSC-level sources.
