Reserve Bank is not a commercial bank. Yet, being the Central Bank, it performs certain general banking functions as well. These functions are as follows:
1. To Accept Deposits:
The bank accepts deposits of the Central Government, State Governments, Port-Trust and private individuals. But no interest is paid on these deposits.
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2. To Deal in Bills:
ADVERTISEMENTS:
Reserve Bank buys, sells and rediscounts the Bills, Promissory Notes and Hundies. However, these bills should not be of the duration exceeding 90-days and should be payable within the country.
3. Lending of Money:
As a Central Bank, the Reserve Bank of India gives loans to the central and state Governments. These loans are of the duration of not more than 90-days. The loans are given against securities, credit notes of the banks and gold or silver.
4. To Deal in Agricultural Bills:
Reserve Bank also buys, sells and discounts agricultural bills. These bills should be payable in, India and should not be of the duration exceeding 15- months.
5. To Deal in Foreign Securities:
The bank deals in all such foreign securities which are encashable within ’10’ years from the date of purchase.
6. To Deal in Costly Metals:
ADVERTISEMENTS:
Reserve Bank deals in the sale and purchase of gold, silver as well as the coins of these metals.
7. To Deal with the Banks of Others Countries:
Being members of IMF, Reserve Bank establishes business relations with the banks of other member countries. It can open accounts with those banks, act as their agent or handle I.M.F dealings.