CMA Intermediate · Financial Management and Business Data Analytics · Financial Institutions
Which institution acts as the banker to the Government of India and the banker's bank, and also regulates the credit supply in the Indian economy?
The Reserve Bank of India is the correct answer because it is India's central bank. It acts as banker to the Government and to commercial banks, issues currency and regulates credit. SBI, NABARD and SEBI do not perform this combination of central banking functions.
- AState Bank of India
- BReserve Bank of IndiaCorrect
- CNABARD
- DSecurities and Exchange Board of India
Explanation
The Reserve Bank of India is the central bank. It issues currency, acts as banker to the Government and to commercial banks, and controls credit through instruments such as the repo rate and CRR. SBI is only the largest commercial bank, NABARD is an apex development bank for agriculture and rural areas, and SEBI regulates securities markets.
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