BANKING AFFAIRS

Detailed explanation-1: -Thus, Reserve Bank acts as a common banker, known as ‘Banker to banks’ function, the operational instructions for which are issued by concerned central office departments of the Reserve Bank. Among other provisions, the Reserve Bank stipulates minimum balances to be maintained by banks in these accounts.

Detailed explanation-2: -Reserve Bank of India (RBI) is called Bankers’ Bank. A bankers’s bank provides financial services to other banks.

Detailed explanation-3: -The commercial banks maintain a current account with the central bank and can borrow money in the very short term. Thus, the banks which have to supply banknotes for their customers (either over the counter or through automatic teller machines) obtain them from the central bank which has an issuing monopoly.