Multiple choice general knowledge

Which among the following function of RBI gives most clear indication that it is Bankers' Bank in India?

  1. Collection of Credit information

  2. Ways & means advances

  3. Liquidity Adjustment Facility

  4. Issuance of Currency

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Liquidity Adjustment Facility (LAF) is the clearest indicator of RBI as bankers' bank because it directly deals with banks - lending to them through repo and borrowing from them through reverse repo operations. This is the quintessential 'banker's bank' function where RBI becomes the lender of last resort and the bank where other banks park their surplus funds. The other options are either regulatory functions (credit information collection) or government-related (ways and means advances) or currency issuer functions.