The RBI supervises banks since they are in the formal sector of loans. Itdoes this
a. It monitors banks so that they maintain cash balance
b. It also ensures that banks give out loans not only to big profit making businesses, but also to small-scale borrowers, cultivators, industries, etc.
c. Banks also have to periodically submit details toRBI on how much they are lending, whom they are lending to, at what interest rate etc.
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