Explain Banker's Bank function of central …

A central Bank is an institution of a country which operates, controls, directs and regulatesthe monitory and financial system of a country . The main functions of RBI are : 1. Bank of issue-- first and important function of RBI is to issue currency notes. 2.CREDIT control-- RBI controls credit creation capacity of commercial banks. 3.BANKER TO THE GOVERNMENT --RBI acts as a banker to both central and state govt. it carries out banking business of the govt. and govt. keeps it cash balances with a central bank. 4. BANKER OF BANKS. -- RBI grantes loans to the commercial banks to fulfill their needs of funds and also accepts their deposits. 5. CUSTODIAN OF FOREIGN EXCHANGE RESERVE -- RBI is the custodian of nation's foreign exchange reserve. It maintains foreign exchange reserve to promote international trade.

As a banker's bank, it has almost the same relation with other Banks in the country as a commercial Bank has with it's customers.

As bankers’ bank, the RBI holds a part of the cash reserves of commercial banks and lends them funds for short periods. All banks are required to maintain a certain percentage (lying between 3 per cent and 15 per cent) of their total liabilities. The main objective of changing this cash reserve ratio by the RBI is to control credit.

As Barker's Bank RBI perform s all the function s for commercial banks as commercial bank perform s for the public. RBI accepts deposits from commercial banks of theor surplus funds as well as %on such deposits i.e.CRR also keep with RBI according to it's guidelines.