Question:
Elaborate the ‘Banker’s Bank and Supervisor’ function of the Reserve Bank of India.
Elaborate the ‘Banker’s Bank and Supervisor’ function of the Reserve Bank of India.
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The RBI ensures liquidity and stability in the banking system by acting as a regulator and supervisor.
Updated On: Jan 13, 2026
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Solution and Explanation
The Reserve Bank of India (RBI) performs the following functions as the ‘Banker’s Bank and Supervisor’:
Banker’s Bank: The RBI acts as a banker to all scheduled commercial banks. It provides short-term funds, acts as a lender of last resort, and facilitates inter-bank clearing.
Supervisor: The RBI supervises and regulates banks to ensure financial stability. It monitors compliance with banking regulations, manages non-performing assets (NPAs), and ensures that banks maintain required reserves. These functions help in maintaining stability and liquidity in the financial system.
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