Question

" RBI plays an crucial role in controlling formal sector loans ." explain?

Answer 1

1) The Reserve Bank of India supervises the functioning of formal sources of loans.
2) The RBI monitors the banks in actually maintaining minimum cash balance out of the deposits they receive.
3) Similarly, the RBI sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries, to small borrowers etc.
4) Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc.