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: -RBI acts as a bank for all the commercial banks in India. Hence, called as bankers bank. It holds their cash reserves, lends them short term funds. It also provides them the central clearing and remittances facilities.