Question

Reserve Bank of India undertakes the important function of managing the government’s banking transactions.
Discuss the above-stated function performed by the Reserve Bank of India.

Hint:

The Reserve Bank acts as the government’s banker by handling funds, managing debt, and implementing monetary policies.

Answer 1

Government’s Banker: RBI manages accounts of the central and state governments. It facilitates the receipt and payment of government funds. 
Public Debt Management: RBI manages the borrowing program of the government through the issuance of government bonds and treasury bills. 
Monetary Policy Implementation: The RBI ensures liquidity and credit control to support government policies.