UPSC CSE Prelims
Question 6
The Reserve Bank of India (RBI) acts as a bankers' bank. This would imply which of the following?
- Other banks retain their deposits with the RBI.
- The RBI lends funds to the commercial banks in times of need.
- The RBI advises the commercial banks on monetary matters.
Select the correct answer using the codes given below:
View correct answer and explanation
Correct answer: D
Correct Option: D
Explanation: As banker to banks, the RBI maintains their accounts, provides liquidity support and guides them on banking and monetary matters.
Statement/Item-wise Analysis:
1: Correct - Scheduled banks hold required cash reserves/other balances at RBI.
2: Correct - RBI supplies funds through liquidity facilities and lender-of-last-resort support.
3: Correct - RBI issues policy guidance and supervisory directions to commercial banks.
Option-wise Analysis:
A: Incorrect - omits correct item 1.
B: Incorrect - omits correct item 3.
C: Incorrect - omits correct item 2.
D: Correct - includes exactly the valid statements/items and excludes the invalid ones.