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Explain any two functions of the Reserve Bank of India.

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 The major functions of Central Bank are :

(i) Issue of Currency : Currency Authority function means that the central bank has the sole authority to issue currency. It brings uniformity in notes circulation. It also gives power to the central bank to directly control money supply.

(ii) Bankers to the government : A Central Bank is a bank to the government like commercial banks are to the public. It accepts deposits from the government and gives loans to the government in times of need.

(iii) Custodian of foreign exchange reserves : The foreign exchange reserves of every country are under the custody of the central bank of that country. The central bank maintains the foreign exchange reserves so that the international trade of the country does not suffer a setback. (iv) Lender of the last resort : It means that if a commercial bank fails to get financial accommodation from anywhere, it approaches the central bank as the last resort. Central bank advances loan to such a bank against approved securities. By offering loans to the commercial banks in situation of emergency, the central bank ensures that the banking system of the country does not suffer any setback and that the money market remains stable.

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