Economics

Central Bank :
Is an apex institution in the banking and financial structure of a country. It plays a leading rote in controlling, regulating, supervising and developing the banking and financial structure of the economy.
Functions of a Central Bank
(i) It issues the currency notes.
(ii) It acts as a Banker to the government.
(iii) Central Bank acts as a banker of banks.
(iv) Central bank also function is as the custodian of foreign exchange reserve of a country.
(v) It controls credit.
(vi) It also perform a developmental and promotional function.
Reserve Bank of India (RBI) :
The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, the banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors that the banks actually maintain the cash balance. Similarly, the RBI sees that the banks give loan not just to profit making businesses and traders but also to small cultivators, small scale industries, to small borrowers etc, Periodically, banks have to submit information to the RBI on how much they are lending to whom, at what interest rate, etc. The supervision of RBI is necessary due to the following reasons.
(i) It is required to safe deposits of the peoples with the banks and the cooperative society.
(ii) It gives a power to RBI to force banks to maintain a minimum cash balance of the deposits they receives.
(iii) The RBI can check the other banks to loan only to honest and real needy people who are having capacity to repay the loan along with interest on time
(iv) RBI checks that all formal credit agencies are following the economic policy or guidelines laid down by the government of the country.
Commercial Banks :
A banking company is one which transacts the business of banking which means accepting deposits for the purpose of Indian companies lending or investment, deposits of money from the public, repayable on demand or otherwise withdrawable by cheque, draft etc. Commercial banks are also called joint stock banks because they are organized in the same manner as joint stock companies.
Main features of commercial banks are –
(i) It deals with money; it accepts deposits and advances loans.
(ii) It also deals with credit. It has the power to create credit.
(iii) It is a commercial institution, whose aim is to earn profit.
(iv) It is a unique financial institution that creates demand.
(v) It deals with the general public.