BANKING AFFAIRS

Detailed explanation-1: -A Central Bank is usually a government banks. It is neither profit non loss motive.

Detailed explanation-2: -Reserve bank of India looks after the monetary system of the country. It is a banker to the banks and the govt of the country, it does not exist for making profits. Its main objective is to make public welfare and economic development.

Detailed explanation-3: -Thus, the legal provisions vest Reserve Bank of India with both the right and obligation to function as banker to the government.

Detailed explanation-4: -The main objective of a central bank is to earn profit.

Detailed explanation-5: -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.