Question

Commercial banks keep a part of their reserves with RBI due to its role as:

• A. Banker to Government
• B. Banker’s bank
• C. Credit controller
• D. Currency issuer

Answer 1

Answer:

B. Banker’s bank

RBI requires commercial banks to maintain a Cash Reserve Ratio (CRR), which is a portion of their deposits kept with RBI. This allows RBI to control money supply and liquidity in the economy. By providing this facility and acting as a lender of last resort, RBI functions as the bank of banks.