Question

Explain "government's banker" function of the Central Bank.

Answer 1

The Central Bank functions as a commercial bank for the government. As banker to the government, the Central Bank provides all those services and facilities to the government which the public gets from the ordinary banks. It operates the accounts of the public enterprises. It manages government departmental undertakings and government funds, and when the need arises, gives loans to the government. It looks after the management of public debt. It accepts the payment of taxes from the public on behalf of the government and makes payment for the cheques issued by the government. It also undertakes transactions relating to foreign currencies on behalf of the government.