Central Bank केन्द्रीय बैंक

Central Bank 

Central Bank is a bank which controls all the banking activity of a country. We also know it as a bank of the Central Government. This bank holds all the authority to control the currency system or generating new currency and also decide the monitory & fiscal policy of the country and credit control by different method. All the country has a central bank like Reserve Bank of India (RBI), Federal Reserve in USA or Bank of France in France etc.  

Reserve Bank केन्द्रीय बैंक 

Functions of Central Bank - 

ü Currency Regulator – central bank has all the authority to generate the new currency according to the requirement. But before generate the currency bank should be carefully go the economic data, inflation or other things. Every bank have different method to generate the new currency, every bank have a gold stock and foreign currency so a bank able to generate in a fix ratio (20% - 45%) of the total like in india, we have a cash reserve of 200 crore (gold of 115cr and foreign security of 85cr).

ü Custodian of Cash Reserve – every bank has a cash reserve and it should be compulsory of all. The amount should hold by the central bank for daily different bank settlement. Also transfer the amount from one bank to another.

ü Banker, adviser for Central Government – In every country, a central bank play a important role for government to give a advise on bank policy or fiscal policy or on other related issue. Central bank also holds the amount of Central Government or State Government but on such an amount, central government to pay any amount.

ü Manage the Foreign Exchange – central bank holds the foreign exchange of any country and also manages it. It’s also deal with the other central bank and also buy or sell the gold & foreign currency at market rate. Central bank also fixes the home currency rate with the foreign currency. Also fulfill all the responsibility as a responsible member of the IMF.

ü Credit control – central bank also fix the different – 2 holding cash ration for commercial bank. These things play an important role to control the inflation or deflation in the home market. For example Current Reserve Ratio (CRR), SLR or Bank Rate etc.

ü Clearing House – central bank is a clearing house for all the commercial bank. Central bank settles all the interrelated payment from each other bank because central bank has an amount of all the commercial bank and it’s become easy to make transfer & settlement from one bank to another.