Answer :
The RBI supervises banks since they are in the formal sector of loans. Itdoes this
Through manyways:
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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