Functions of Central BankTraditional FunctionsDevelopmental Functions
Functions of Central BankIssuer of the currencyDevelopment Role Banker to GovernmentBanker to BanksRole of central bank in inflation controlformulate monetary policymanager of foreign reserveclearing house functionsRegulations of Banking systemLender of the Last Resort
Functions of Central BankIssuer of the currencyTo ensure adequate quantity of supplies of currency and coins and notes of good qualityIssues new currency and destroys currency and securities as per circulationIt has to keep in forms of gold and foreign securities as per statutory rules against notes and coins issued.
Functions of Central BankDevelopmental role:Developing Specialized Financial InstitutionsAgriculture Development Bank LtdInfrastructure Development BankMicro Finance InstitutionsInfluencing money market market and Capital MarketCollecting Statistical Data
Functions of Central BankBanker to the Government:Performs all banking function for the central and the state governments and also acts as their banker.It Makes loans and advances to the states and local authorities. It acts as adviser to the government on all monetary and banking matters.
Functions of Central BankBanker to the Banks:Maintains banking accounts of all scheduled banks.Regulates the opening/ installation of ATM Fresh currency notes for ATMs are supplied by Central BankThe central Bank also regulates the trade of gold. Banks are involved in the trade of gold in India.
Functions of Central BankBanker to the Banks:NRB has invited applications from banks for direct import of gold to curb illegal trade in gold and increase competition in the market.Issuances of guidelines and directives for the commercial banks.
Role of central bank in inflation controlInflation arises when the demand increases and there is a shortage of supply. There are two policies in the hands of the CB:Monetary Policy: It includes the interest rates. When the bank increases the interest rates than there is reduction the borrowers and people try to save more as the rate of interest has increased.