Question

The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following?
1. Other banks retain their deposits with the RBI.
2. The RBI lends funds to the commercial banks in times of need.
3. The RBI advises the commercial banks on monetary matters. Select the correct answer using the codes given below :

• A. 2 and 3
• B. 1 and 2
• C. 1 and 3
• D. 1,2 and 3

Answer 1

The correct option is D 1,2 and 3

The Reserve Bank of India acts as a lender of last resort and a bankers' bank. It provides credit to banks in times of need and other banks retain their deposits with the RBI. The RBI also advises the commercial banks on monetary matters.