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What is the role of RBI as a Banker’s Bank and Supervisor?

Jun 4, 2015 15:17 IST

    What is the role of RBI as a Banker’s Bank and Supervisor?

    • RBI holds a part of the cash reserves of banks, lend them funds for short period and provides them with centralized clearing and cheap and quick remittance facilities.
    • The RBI is authorized statutorily to require scheduled commercial banks to deposit with it a stipulated ratio of their net total liabilities.
    • According to Banking Regulation Act 1949, all banking companies having paid up capital of the RBI does serve as the common fund out of which the RBI can and does make advances to banks in temporary needs of funds.
    • The RBI is supposed to function as only the lender to last resort.

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