Who supervises the functioning of banks? In what ways is the supervision done?
RESERVE Bank of India supervises the functioning of formal sources of credit.
- The banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors the banks in actually maintaining cash balance.
- The RBI sees that the banks give loans not just to profit making business 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.