Question

Which statement best describes the RBI's role as the "bank of banks"?

• A. It provides loans to individuals.
• B. It regulates and supervises other financial institutions.
• C. It manages the stock exchange.
• D. It sets interest rates for retail loans.

Answer 1

Answer:

B. It regulates and supervises other financial institutions.

• RBI's role as the "bank of banks" because:

1. The RBI acts as a supervisor and regulator for all banks in India

2. It oversees the functioning of commercial banks and other financial institutions

3. It sets banking policies, guidelines and regulations that other banks must follow

4. It provides banking facilities to other banks, including lending and holding their deposits