Reserve Bank of India Works As A Bankers' Bank ↓
The Reserve Bank of India i.e RBI is the central bank of our country. It was established in the year 1935, under the Reserve Bank of India Act, 1934.
Being a central bank, RBI has control over the entire currency and banking system in India. It acts as a banker to both the state and the central government in India. It has the exclusive right to issue currency, notes in the country.
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The Reserve Bank of India has to act as a Bankers' Bank. All the commercial banks operating in India are mandatory to keep a cash reserve with RBI. Further, they have to maintain their current accounts with it.
As a banker's bank, the Reserve Bank of India facilitates the clearing of cheques between commercial banks and helps in inter bank transfer of funds.
Being Bankers' bank, the Reserve Bank of India can grant financial help to scheduled banks. It also acts as "Lender of Last Resort" by providing emergency advances to banks.