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Question
Explain the significance of The Reserve Bank of India in the Indian economy.
Solution
- It monitors the efficiency of official loan sources.
- Out of the deposits they receive, the banks maintain a minimum cash balance.
- The RBI keeps an eye on whether the banks actually keep a cash balance.
- The RBI ensures that banks provide loans to small farmers, small-scale businesses, small borrowers, and other borrowers in addition to profit-making companies and traders.
- Banks are required to periodically provide the RBI with information on how much they are lending, to whom, at what interest rate, etc.
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