The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following?
- Other banks retain their deposits with the RBI.
- The RBI lends funds to the commercial banks in times of need.
- The RBI advises the commercial banks on monetary matters.
Select the correct answer using the codes given below :
Detailed Explanation:
✅ Statement 1 – Correct: Commercial banks maintain their deposits with the RBI in the form of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements, making RBI the custodian of banking system reserves.
✅ Statement 2 – Correct: RBI acts as the Lender of Last Resort, providing emergency liquidity to commercial banks through mechanisms like repo operations and marginal standing facility during financial crunch.
✅ Statement 3 – Correct: RBI exercises supervisory and regulatory functions over commercial banks, advising them on monetary policy implementation, credit management, and prudential norms to maintain banking system stability.
Question 9 of 9 Reserve Bank of India
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The Reserve Bank of India regulates the commercial banks in matters of - Liquidity...
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