Question

Which of the following is not the function of Reserve Bank of India (RBI)?
1. Banker to Government
2. Issue of Bank Notes
3. Accepting deposits from the customer
4. Custodian of Cash Reserves of Commercial Banks

Answer 1

Correct Answer - Option 3 : Accepting deposits from the customer

The correct answer is Accepting deposits from the customer.

• The Reserve Bank of India (RBI) was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934.
• RBI controls the credit operations of banks through quantitative and qualitative tools, holds the cash reserves of all the scheduled banks, controls the banking system through the system of licensing, inspection, and calling for information, acts as the lender of the last resort by providing rediscount facilities to scheduled banks, has sole right to issue banknotes of all denominations, etc.
• The Reserve Bank of India does not accept deposits from customers.

• The main functions of RBI are as follows:-
• Issue of Bank Notes:
  • The Reserve Bank of India has the sole right to issue currency notes except one rupee notes which are issued by the Ministry of Finance.
  • Currency notes issued by the Reserve Bank are declared unlimited legal tender throughout the country.
• Banker to Government:
  • As bankers to the government, the Reserve Bank manages the banking needs of the government.
  • It has to maintain and operates the government’s deposit accounts.
  • It collects receipts of funds and makes payments on behalf of the government.
  • It represents the Government of India as a member of the IMF and the World Bank.
• Custodian of Cash Reserves of Commercial Banks:
  • The commercial banks hold deposits in the Reserve Bank and the latter has the custody of the cash reserves of the commercial banks.
• Custodian of Country’s Foreign Currency Reserves:
  • The Reserve Bank has the custody of the country’s reserves of international currency, and this enables the Reserve Bank to deal with crises connected with adverse balance of payments position.
• Lender of Last Resort:
  • The commercials bank come to the reserve bank of India at the time of emergency to tide over financial difficulties, and RBI provided financial, help and might be charged a higher rate of interest.