Skip to content

Elaborate the… (Class 12 Economics SQP 2023-24, Q15)

questionbuddy.in/q/cbse-12-economics-2023-24-sqp-q15-elaborate-banker-bank-supervisor-function

EconomicsCBSE Class 12 · Sample paper, session 2023-24 · 4 marks · Very short answer

CBSE Class 12 Economics sample paper 2023-24: question 15

From the official CBSE sample question paper for 2023-24, section A, question 15, for 4 marks. Try it first; the hints and our step-by-step solution are below.

Q15 · 4 marks · Very short answerMoney and Banking

Elaborate the ‘Banker’s Bank and Supervisor’ function performed by the Reserve Bank of India.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Where do banks keep their own reserves?

Hint 2

Who licenses new bank branches?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Banker's bank: the RBI accepts deposits from commercial banks and lends to them when needed. It holds part of their reserves and uses them to settle inter-bank claims (clearing).

    1½ marks

  2. As the supreme authority of the banking system, it is the lender of last resort: it gives short-term credit to commercial banks against approved securities when they face a crisis.

    1 mark

  3. Supervisor: the RBI supervises, regulates and controls commercial banks.

    ½ mark

  4. This covers their licensing, branch expansion, liquidity of assets, management, and mergers (amalgamation) and liquidation, which protects depositors and keeps the system sound.

    1 mark

Answer: As banker's bank, the RBI keeps banks' reserves, settles claims and is lender of last resort; as supervisor, it regulates licensing, branches, liquidity, management and mergers.

Where the marks are

  • Banker's bank and supervisor functions explained (marked as a whole, 4)

Revise the chapter

Practise this chapterBoard-style questions from Money and Banking, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.