Question

What is difference between Reserve Bank and other Banks?

• A. Issue of foreign exchange
• B. Acts as banker to the government
• C. Issue of agricultural loans
• D. Printing of currency

Answer 1

The correct option is B Acts as banker to the government

RBI is the monetary authority of the country and regulator of banks. It issues currency and acts as banker to the government. However, other banks like State Bank of India are commercial banks who accept deposit and lend money to the public. RBI is the Bank of Bankers. It controls and monitors the functioning of all banks, while a bank can not control other banks. RBI formulates policies to be followed by all bankers.

A bank can not formulate policy to be followed by other banks. While banks deal with their customers, like the way RBI deals with all the Banks. As a customer can not start banking transactions if the account is not opened, a Bank can not start it's functioning until it is approved by Bank in the form of issuing a licence. All banks are working according to the rules framed by RBI.