Question

List two ways in which a Central Bank acts as a 'Banker to the Government'.

Answer 1

Central Bank acts as a banker to the government:
(a) The government collects large sums of money through taxation. The government also spends equally large sums.
(b) RBI/Central bank receives the deposits of cash, cheque, drafts etc. from the government. It provides cash to the government for paying salaries and wages and other cash disbursements.