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What is the role of RBI as Banker to Government?

Important banking qna for banking aspirants, which is helpful in banking exam.

Mar 13, 2015 14:00 IST
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  • It transacts all banking business of the government. In return, the government keep their cash balances on current account deposit with the RBI
  • It provides short term credits to the government
  • The central government is empowered to borrow through treasury bills and amounts it likes from RBI. Thus, the Central Government is the ultimate monetary authority of the country.
  • The RBI provides short term advances to the state government called ways and means advances. But, the state governments are not empowered to borrow any amount they like from RBI.
  • It acts as advisor to the government.

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