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How does Reserve Bank of India play crucial role in controlling the formal sector loans? Explain.

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The Reserve Bank of India (RBI) supervises all formal sources of credit or loan approvals or disbursements in India.

This is the Central Bank of India.

(i) Commercial Banks are also required to hold the part of their cash with Reserve Bank of India maintaining a minimum said type of cash out deposits and banks also has to submit the lending information details to the Reserve Bank of India to ensure the bank gives loans to everyone in need.

(ii) Reserve Bank of India sees that the banks give loans not just to profit making business and traders but also to small cultivators, small-scale industries to small borrowers, etc.

(iii) Banks have to submit the lending information details to the Reserve Bank of India to ensure that the bank give loans to all kinds of customers.

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