DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name Staff Member : P. BADARINARAYANA
Designation : Sr. Lecturer
Branch : DCCP
Institute : Govt. Polytechnic, NELLORE
Year/Semester : VI Semester
Subject : BANKING
Sub. Code : CCP-604(B)
Topic : Functions of Reserve Bank of India
Duration : 50 Mts.
Sub Topic : RBI as a banker to the Government
Teaching Aids : Animations

CCP604(B).39 1
Objectives
On the completion of this period , you
would be able to
 Explain the RBI functions as Banker to
the Government.

CCP604(B).39 2
Recap
 In the last lesson we have seen the Note
issuing function of RBI.
 Today we will see the the function of RBI as a
Banker to the Government.

CCP604(B).39 3
Banker to Government of India

 The Reserve Bank of India (RBI) is the

banker to the Government of India statutorily.
It becomes the banker to the State
Governments also, if they make any
agreement to that effect.

CCP604(B).39 4
Banker to Government of India

 RBI functions as a banker to the Government by

accepting money on Government account, making
payments on governments’ behalf, effects
exchange remittances, managing public debt etc.

CCP604(B).39 5
Banker to Government of India

 The RBI also provides advisory services to the

Government on all monetary and banking matters
like
 industrial and agricultural finance, legislation
affecting banking and credit, financial aspects of
planning, co-operative organization, international
finance etc.

CCP604(B).39 6
Banker to Government of India

In clear terms the RBI acts as the banker, agent and

adviser to the government, as banker to the
government , the RBI performs several functions
 Maintaining the cash balance of get
 Making and receiving payment for the
government

CCP604(B).39 7
Banker to Government of India

 Carrying the remittances and other banking

operations of the government
 Creating favourate conditions for the
successful conduct of govt. borrowing and
refunding operations
 Making temporary loans to the govt. for three
months . These loans are known as ways and
means advances
 Undertaking the sale of treasury bills when
never necessary
CCP604(B).39 8
Banker to Government of India

As agent of the govt, the RBI performs the follow

 Advising the government on all important monetary
and banking matters
 Advising the government on the matters like
 Floating new loans
 Redemption of public dust
 Investments of finds
 Agricultural, co-op, industrial credited
 Financial aspects of planning and
development
CCP604(B).39 9
Banker to Government of India

 Providing foreign exchange RBI undertaking to

provide to Government with the foreign exchange
required
 Executes monetary policy the government is the final
authority for laying down the monetary policy and
monetary standard ,the RBI is responsible for
maintaining monetary standard and for carrying of
monetary policy

CCP604(B).39 10
Summary

The RBI acts as

 Banker
 Agent
 Advisor to the banker it performs several functions

CCP604(B).39 11
Frequently Asked Questions
1. Explain the function of reserve bank of india
as a banker to the government?
2. what the advisory services rendered by the
rbi to the government?

CCP604(B).39 12