Functions Of A Central Bank 

A central performs several essential functions in every economy. The primary functions of a central bank are discussed below.

• Issue of Currency

 The central bank enjoys the sole monopoly of issuing currency to secure control over the volume of cash and credit. That is why it is sometimes called the 'Bank of Issue'.These notes circulate throughout the country as legal tender money. Like any other central bank, the RBI has the sole right to issue currency notes.

The following are the main reasons for giving the monopoly right of note-issue to the central bank. 

1. It brings uniformity to note issue.
2. It is easier to control credit when there is a single agency of note issue. 
3. It keeps the public faith in the paper currency.
4. It helps in the stabilisation of the internal and external value of the currency.

• Banker, Fiscal Agent And Advisor to the Government:

Central bank everywhere in the world acts as banker, fiscal agent and advisor to its respective government

As Banker: As a banker to the government, both the central and state governments, it performs the following functions 

1. It accepts receipts and makes payments on behalf of the government.
2. It also advances short-term loans to the government.

As Fiscal Agent: Central bank performs the following functions.

1. It manages the public debt.
2. It collects taxes and other payments on behalf of the government.

As Advisor: The central bank also acts as the financial advisor to the government. It advises the government on all financial and economic matters such as deficit financing, devaluation of the currency, trade policy etc.

• Banker of the banks:

The central bank has the same relationship with the commercial banks as the latter has with the general public. As bankers, the bank the central bank performs several functions. The central bank also gives them loans in times of financial cost.

• Lender of the Last Resort:

Central bank acts as the lender of last resort. It a commercial bank faced with a financial crisis, the only institution that can finally come to its rescue is the central bank. Commercial banks can get their trade bills discounted.

• Supervision of the Banks:

The central banks supervise, regulates and controls the commercial banks. The control is exercised by periodic inspection of the banks and returns filed by them. In India, the RBI has been vested with extensive powers to control the banks under the Reserve Bank Of India Act 1934 and Banking Regulation Act 1949.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.