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Question
Mention two ways in which the Reserve Bank of India assists the commercial banks.
Answer in Brief
Solution
The Reserve Bank of India (RBI) assists commercial banks in two main ways:
- Lender of Last Resort: During times of financial difficulties, the RBI provides funds to commercial banks to ensure liquidity and stability in the banking system.
- Monetary Policy Regulation: The RBI manages interest rates and the money supply, which have a direct impact on commercial bank operations and help to ensure economic stability.
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Functions of a Central Bank
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