Question

Which function of RBI makes it the “bank of banks”?

• A. Issue of currency notes
• B. Credit control
• C. Banker’s bank
• D. Custodian of foreign exchange

Answer 1

Answer:

C. Banker’s bank

RBI acts as a lender of last resort to commercial banks and other financial institutions. It provides liquidity, refinance facilities, and maintains deposits of banks, ensuring stability in the banking system. This supervisory and support role earns it the title “bank of banks.”