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The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following

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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.

(a)

2 and 3 only

(b)

1 and 2 only

(c)

1 and 3 only

(d)

1, 2 and 3

Answer:

(d)

Core Books/NCERT

Explanation

The Reserve Bank of India (RBI) performs several key functions as the central bank of the country, one of which is acting as a bankers’ bank. This means that other banks maintain their deposits with the RBI, the RBI lends funds to these banks when they face shortages, and it also advises them on various monetary matters. Thus, all three statements are correct, and the correct answer is (d) 1, 2 and 3.