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Functions of the Central Bank

Give reason o...

Question

Give reason or Explain
A Central Bank may take "Direct Action" against the defaulting Commercial Banks.

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Solution

The central bank is an apex bank that controls and regulates the entire banking system of a country. It is the bank of the bankers and has the power to take any direct actions and punishments against illicit activities performed by any defaulting commercial banks.

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Similar questions

Q. Give Reasons or Explain the following:
A Central Bank must take "Direct Action" against the defaulting commercial banks.

Q. Give reasons or explain.

1. Clearing house system economises the use of cash.
2. Central Bank acts as a lender of the last resort.
3. The CRR affects the lending capacity of the banks.
4. As a banker to the government, the Central Bank transfers government funds.
5. A Central Bank may take 'Direct Action' against the defaulting commercial banks.

Q. The RBI has powers to take direct action against commercial banks.

Q. Give Reason Or Explain the following statements.
Every loan creates a deposit or commercial banks can create deposits through loan.

What is a commercial bank? Explain various types of accounts with commercial banks.

OR

What is central bank? Explain any three quantitative measures to control the money supply in the market.

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