gs1medium

The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following?

  1. 1.Other banks retain their deposits with the RBI.
  2. 2.The RBI lends funds to the commercial banks in times of need.
  3. 3.The RBI advises the commercial banks on monetary matters.

Select the correct answer using the codes given below.

  1. A.2 and 3 only
  2. B.1 and 2 only
  3. C.1 and 3 only
  4. D.1, 2 and 3
▶ Answer & Explanation

Correct answer: D. 1, 2 and 3

The Reserve Bank of India, functioning as a bankers' bank, holds deposits from other banks, provides them with liquidity through lending facilities like the repo window, and offers guidance and oversight on monetary policy and banking regulations. These functions are crucial for maintaining financial stability and the smooth operation of the banking system.

Source: UPSC gs1 2012

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