The document discusses the roles and functions of a central bank. It provides that a central bank is the apex financial institution in a country that implements monetary policy and issues currency. It serves as a bank of issue, banker and advisor to the government, custodian of commercial bank reserves and foreign exchange reserves, lender of last resort, and controller of credit in the economy. The central bank also facilitates clearing and settlement between commercial banks. Maintaining price stability, exchange rate stability, employment maximization, and money market stabilization are key objectives of a central bank's credit control policies.

1. THE CENTRAL
BANK AND
CREDIT CONTROL

2. MEANING
A national bank that provides
financial and banking services
for its countrys’s government and
commercial banking system , as
well as implementing the
governments monetary policy
and issuing currency.
Apex financial
institution
No profit motive
Influencing the
economy in desirable
directions
Implementing
monetary policy

4. Bank of issue
Central bank has the monopoly
authority to issue all the paper
notes (except Re1 note and
coins ) which are issued by the
Ministry Of Finance
Upto the end of 19 th century ,
central bank was known as
Bank of issue .

5. Banker , Agent and Advisor to
the Government
As a banker : it accepts deposits and
grant loans to the government .It
maintains a current account for
keeping their cash balances .
As a agent : RBI buys and sells
securities and treasury bills on behalf
of government
As an advisor : RBI gives advice to the
government on important financial
matters .

6. Custodian of cash reserves of
commercial banks
The commercial banks are compulsory
required to hold a part of their deposits
with RBI in the form of CRR
Moreover central bank also acts as a
supervisor for commercial banks , while
regulating its supervisory functions
central bank regulates and controles the
credit creation of commercial banks

7. Custodian of nations foreign
exchange reserve
RBI exercises manage floating to
avoid fluctuations in exchange rate in
foreign exchange market by selling
and buying foreign currency .
In case of depreciation of domestic
currency ,it starts selling foreign
currency . In case of appreciation it
buys foreign currency to stabilize the
value of currency .

8. Lender of last resort
If commercial banks fail to get help
from anywhere it approaches central
bank as a last resort . At this situation
central bank grants loan to the needy
bank and help in the case of
emergency .It makes sure that
commercial bank does not face any
difficulty or financial setback .

9. Bank of central clearance
, settlement and transfer
RBI performs a function of
clearing house even as every bank
has their accounts with RBI.
EXAMPLE : Axis bank receives a
cheque of rs 1000 drawn on ICICI
bank and ICICI bank receives a
cheque of Rs 500 drawn on Axis
bank .both the banks have their
account with RBI .Therefore
cheques of both banks can be
cleared against each other

10. Controller of
Credit
RBI regulates the money
supply through its
monetary policy .RBI
increases or decreases
the money supply during
inflation or deflation .

11. MISCELLANEOUS
FUNCTIONS
The central bank also
maintains relations with
other financial institutions
like I.M.F OrWorld Bank .
The central bank conducts
many economic surveys
and conducts seminars and
publishes various kind of
reports .

12. Direct dealings
with public
Controlling
prices
Integrated
commercial
system
Manpower
training
Monetary
expansion
Establishment
of term landing
institutions
Proper branch
expansion
CENTRAL BANK IN DEVELOPING ECONOMIES

13. EXCHANGE
STABILITY
PRICE
STABILITY
MAXIMISATIO
N OF
EMPLOYMENT
STABILISATION
OF THE MONEY
MARKET
MAXIMISATION
OF
EMPLOYMENT
OBJECTIVES OF CREDIT CONTROL