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Yes. Central Bank of India, a government-owned bank, is one of the oldest and largest commercial banks in India. It is based in Mumbai. The bank has 3,563 branches and 270 extension counters across 27 Indian states and three Union Territories. It also has a large ATM Network that would run in the thousands just like its branches.
Wiki User
∙ 12y ago
Wiki User
∙ 13y agoNo. It is a quasi-governmental organization involved in the fiscal operations of banks in the US.
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Differences between functions of the central bank and commercial bank?
central bank does not accept deposit from customers whiles commercial bank does. central bank is responsible for issuing of currencies whiles commercial bank does not. central bank is accountable to the government whiles commercial bank is accountable to the share holders. central bank is not set up for profit but commercial bank is set up for profit. central bank is governed by an act of parliament whiles commercial bank is set up by an incorporation. central bank formulate monetary policies whiles commercial bank does not.
What are the ways the central bank can control the activities of the commercial bank?
explain four ways in which the central bank esercises control over commercial banks
Why a central bank may close down a commercial bank?
A central bank may close down a commercial bank if they feel that the bank isn't doing its duties correctly. If it is cheating customers or misusing funds or not following the guidelines laid down by the central bank it can be closed. Usually central banks give warnings to a bank if they find anything and if their warnings are not listened to, they resort to closing the commercial bank down as the last resort.
How central bank of nigeria controls other commercial banks?
central bank control other bank by giving them loan and it debited their account.
Why Net-Worth of commercial banks fall sharply when central bank apply moneyary policy?
Commercial Bank have Net worth 200,0000
Is reserve bank of India a commercial bank?
No. Reserve Bank of India is the central bank of India. It is not a regular commercial bank. It supervises and regulates the working and operations of all commercial banks in India. It has been in existence since the British Rule in India.
What do you mean by reverse repo rates?
# 2 Repo rate is the discounting rate at which central bank borrows security from commercial bank.Repo means repurchase agreement b/w RBI &commercial bank. Reverse repo is the rediscounting rate at which commercial bank borrows discounted security from central bank ie RBI.
How can you control the liquidity in system with CRR?
With Cash Reserve Ratio the Commercial Banks can keep money in Central Bank. So that amount of money keeps intact coz the commercial bank do not retain that with themselves. So if in a case the commercial banks need money they can easily opt for the aforesaid invested money with central bank.
Is state bank of India a central bank?
Yes and No. Actually speaking, there is a bank named Central Bank of India which offers commercial and retail banking services to citizens of India. At the same time, the term Central Bank of a Country refers to the bank that governs all banking operations in a country. If that is what you are referring to by central bank in your question, then Yes, Reserve Bank of India (RBI) is the central bank in the country.
What are functions of central bank India?
to provide loan to customers and other commercial banks. to check the functioning of commercial banks.
How successful was DZ Bank?
By June 2004 DZ Bank had become both a central bank and a commercial bank and was one of the world's eight largest cooperative banks.
What is monetry policy?
Defination: Monetary policy is the oldest policy for the economic stability. It is a policy which is adopted by the central bank of the country to control the supply of money: We can say that all those methods which are adopted by central bank, of the country to control the supply of money are called the monetary policy. In simple words, monetary policy means monetary management. In the words of Harry G. Johnson, "It is a policy of central bank to control the supply of money with the aim of achieving macroeconomic stability". Tools Of Monetary Policy They are classified into 1. Quantitative Methods 2. Qualitative Methods 1. Quantitative Methods: They consists of those methods which Physically affect the amount of credit creation in the economy. They are as: 1) Changes in Bank Rate Policy or Rediscount Rate: The rate at which the central bank of the country gives loans to commercial banks is known as Bank Rate or re-discount rate, In Pakistan; State Bank charges 10% as bank rate. By changing such rate of interest, the central bank can influence the supply of money in the country. To control inflation the central bank increases the rate of interest. The commercial banks will also increase their rate of interest. Accordingly, the loans will decrease, investment, output and prices will fall. In this way, inflation will be controlled. Now, we assume that the country is facing deflation. To remove deflation central bank will decrease the bank rate, the commercial banks will also decrease the rate of inl91'Cst. In this way, people will get more loans. Investment production, employment and Prices will start rising up. Accordingly, deflation will be controlled. Limitations: But the success of the bank rate policy depends upon * The fact that how flexible is the economic system. How rapidly, there will be the effect of bank rate on other variables of the economy, like prices, wages, Interest and output, etc. * Commercial banks should abide by the instructions of the central bank. If the central bank brings changes in the rate of interest, the commercial banks should also change the rate of interest. * If commercial banks already have excess reserves then commercial banks will not depend upon central bank. It this way, they will not care for changes in the rate of interest from central bank. * If economic activity is flourishing or economy is having boom, then the business class will be prepared to pay even higher rate of interest and inflation will not to be controlled. 2) Open Market Operation .. This is the second instrument of the monetary policy. Under this technique, the central bank sells or purchases 'government securities. If the central bank finds that commercial banks are providing excessive loans which are creating inflation. To remove the inflation, the central bank sells the government securities. The commercial banks will purchase these securities to earn interest against such securities. In this way, the resources of commercial banks will go down. They will advance less loans. Accordingly, the inflation will be controlled. If there is deflation in the economy. To control the deflation, the central bank purchases the government securities. Then the monetary base of the commercial banks will increase their loaning power will increase. As a result, investment will increase, income and prices will go up. LimitationsThe problem is that, in most of the countries the money market is not organized where the securities could be sold or bought. The funds which are collected through sale of government securities should not be spent on unproductive fields. 3) Changes in Reserve Requirements Each commercial bank has to keep a certain proportion of its deposits in the form of reserves just to meet the demands of the depositors. As in the case of Pakistan, each commercial bank has to keep 30% of its deposits to meet the needs of its depositors. The central bank can influence this reserve rate. If the central bank realizes that the commercial banks are advancing excessive loans, it will increase the reserve requirements. Accordingly, commercial banks could advance less loans. On the other hand, in deflation, if the central bank reduces the reserve requirements, the commercial banks will be able to advance' more loans. Hence, deflation could be removed. 4) Changes in Reserve CapitalEach commercial bank has to keep a certain ratio of its deposit with central bank. In case of Pakistan, each commercial bank has to keep 5% of its deposit in the central bank. By changing the reserve capital, a central bank can control the supply of money by commercial banks. When there is inflation in the economy. To remove this inflation, the central bank will increase the reserve ratio. As a result, lending of commercial banks will fall. As a result the supply of money will decrease. On the other hand, if central bank decreases the 'reserve ratio, the commercial banks will be having more funds to advance. Accordingly, the deflation could be controlled. 5) Changes in Marginal Requirements Commercial banks do not give loans against leaves, rather they ask for pledges to make. How much a person will have to pledge is settled by the central bank. This is given the name of marginal requirement. The central bank can bring changes in the marginal requirements. If there is inflation in the economy, the marginal requirements will increase. In this way, people will get less loans. As a result, supply of money will decrease. During deflation the marginal requirements are decreased. Hence people will get more loans from the commercial banks. As a result supply of money will go up and deflation will be controlled. 6) Credit Ceiling/Rationing of Credit The central bank can issue directions that loans will be given to commercial banks upto a certain limit. As a result, the commercial banks-will be careful in advancing loans to the people. But this is a very strict method, hardly adopted by the central bank. Moreover, if the commercial banks are having other sources to borrow, they will not bother for this policy. 2) Qualitative Methods * Moral Suasion: It is concerned with just as a moral request by central bank to commercial banks that loans should not be given for unproductive fields which create inflation. Loans should not be given for speculative purposes and hoarding. But such like requests could be effective in the developed countries. * Consumers Credit Control: This instrument is applied during inflation. If the central bank wants to control the supply of money, it will issue directions to commercial banks that loans should not be advanced for consumption purposes or for consumer durables because they create inflation. * Direct Action: The instrument of direct action is concerned with the policy of central bank against commercial banks. It can refuse to give loans to commercial banks. The central bank will not advance loan to commercial banks for the sectors which create inflation. Moreover, if commercial banks do not follow the instructions of the central bank, It will refuse to lend commercial banks * Publicity: The central bank of the country is the overall in charge of economic stability of the country. Its aim is to protect the economy from inflation and deflation. For this purpose, it analyses the whole economy. It keeps an eye over the activities of the commercial banks. If the commercial banks are found advancing loans which create inflation, their activities will be unhealthy for whole economy. The central bank can black list such banks. Thus to avoid such bad reputation in' future, they will be careful in advancing loans. By: Shafaq Chohan
