All Government Jobs Are you willing to know the detailed information about the RBI Functions- Banker to other Banks? Here is the article which provides you the clean and clear information about the RBI Functions- Banker to other Banks. RBI is bank of all banks in India. As a banker of banks, RBI: Enables smooth and swift clearing and settlements of inter-bank transactions. Provides efficient means of funds transfer for all banks. Enables banks to maintain their accounts with RBIfor statutory reserve requirements and maintenance of transaction.
RBI is bank of all banks in India. As a banker of banks, RBI:
- It enables smooth and swift clearing and settlements of inter-bank transactions.
- It provides efficient means of funds transfer for all banks.
- It also enables banks to maintain their accounts with RBI for statutory requirements and maintenance of transactions balances.
- Acts as a lender of last resort.
The RBI maintains current accounts of all other banks and also provides the facility to maintain cash reserves and also to carry out inter-bank transactions. RBI Provides the real-time gross settlement system facility to the banks for interbank transactions.
Statuary Reserves:-
As per the banking Regulations Act 1949, banks have to keep a portion of their demand and time liabilities as cash reserves with the Reserve bank, thus necessitating a need for maintaining accounts with the bank. But now it is the portion of Net Demand and Time Liabilities (NDTL). So, the RBI provides banks with the facility of opening accounts with itself. This is the "Banker to Banks" function of the Reserve Bank, which is delivered through the Deposit Accounts Department of RBI at Regional Offices.
Lender of the Last resort:-
The Bank can borrow from the RBI by keeping eligible securities as collateral or any other arrangements and at a time of need (or) crisis, they approach RBI for Financial help. Thus RBI works as a lender of the Last Resort for banks.
How RBI regulated and Supervises the Financial System:-
One of the most important functions of RBI is to work as a regulator and supervisor of the financial system. RBI not only regulates and supervises the Indian Banks but also Foreign Banks, Regional Rural banks, Local Area Banks, Cooperative Banks, Financial Institutions including Development Financial Institutions and Non-Banking Financial Companies.
