Answer the following questions.
How does a Central bank(for example RBI) transfer funds from one person to another in different banks?

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Solution

All commercial Banks keep deposits with the Central Bank. So it acts as the clearing house (e.g.). A customer who has an account in Bank 'A' issues a cheque of Rs 10,000/- to a person who has an account in Bank 'B'. Then instead of actual (or) real transfer of money from Bank 'A' to 'B' in the books of accounts in Bank 'A' Rs 10,000 will be debited and the same amount will be credited in Bank 'B'.

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Answer the following questions.How does a Central bank(for example RBI) transfer funds from one person to another in different banks?

Answer the following questions.
How does a Central bank(for example RBI) transfer funds from one person to another in different banks?