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  • RBI as Banker of Banks: Its Role and Functions

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    The Reserve Bank of India (RBI) acts as the bank of all banks in India by requiring banks to keep a portion of their demand and time liabilities as cash reserves with the RBI. This necessitates banks maintaining accounts with the RBI. As the 'Banker to Banks', the RBI provides this facility through its Deposit Accounts Department. Additionally, the RBI acts as the Lender of Last Resort by allowing banks to borrow from the RBI using eligible securities or other arrangements, especially during times of need or crisis.

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    RBI as banker of banks

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    RBI as banker of banks

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    The Reserve Bank of India (RBI) acts as the bank of all banks in India by requiring banks to keep a portion of their demand and time liabilities as cash reserves with the RBI. This necessitates banks maintaining accounts with the RBI. As the 'Banker to Banks', the RBI provides this facility through its Deposit Accounts Department. Additionally, the RBI acts as the Lender of Last Resort by allowing banks to borrow from the RBI using eligible securities or other arrangements, especially during times of need or crisis.

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    Download as PDF, TXT or read online from Scribd
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    19 views1 page

    RBI as Banker of Banks: Its Role and Functions

    Uploaded by

    sree8884
    The Reserve Bank of India (RBI) acts as the bank of all banks in India by requiring banks to keep a portion of their demand and time liabilities as cash reserves with the RBI. This necessitates banks maintaining accounts with the RBI. As the 'Banker to Banks', the RBI provides this facility through its Deposit Accounts Department. Additionally, the RBI acts as the Lender of Last Resort by allowing banks to borrow from the RBI using eligible securities or other arrangements, especially during times of need or crisis.

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    Articles from General Knowledge Today

    RBI as Banker of Banks


    2011-04-28 09:04:12 GKToday

    RBI is bank of all banks in India. 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. Earlier, (originally in the BR act) it was as follows 5% of demand liabilities and 2% of time liabilities. 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 (DAD) of RBI at regional offices. LORL: The banks can borrow from the RBI on the basis of eligible securities or any other arrangement and at the time of need or crisis, they approach RBI for financial help. Thus RBI works as Lender of the Last Resort (LORL) for banks.

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