- 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.
What is the role of RBI as Banker to Government?
Important banking qna for banking aspirants, which is helpful in banking exam.