Banker to Banks: RBI's Lender Role Explained
The role of a 'Banker to Banks' involves the central bank managing the accounts of commercial banks, acting as a clearinghouse for interbank payments, and providing essential banking services to them.
The 'lender of the last resort' function is crucial for maintaining financial stability. It means the central bank provides emergency liquidity funding to solvent but illiquid financial institutions when they cannot obtain funds from any other market source.
The Reserve Bank of India (RBI) performs both these critical functions in the Indian financial system. It oversees the banking sector and provides liquidity support when needed.
Commercial banks like the Nationalised banks, State Bank of India, and Union Bank of India operate under the RBI's supervision but do not act as the central bank or the ultimate lender of last resort.
Therefore, the institution acting as the Banker to Banks and the 'lender of the last resort' is the Reserve Bank of India.
Important Questions from Reserve Bank of India
Reserve Bank of India became the first central bank in the world to have more than one million followers on ______ in November 2020
Which of the following is regarded as a supervisory function of the Reserve Bank of India?
The ____ is vested with the responsibility of conducting monetary policy of India.
Coins in India are minted by
Who was the RBI (Reserve bank of India) governor during demonetisation the year 2016?
