Q.State the objectives of Central Bank.

The central bank aims at currency regulation, price and monetary stability, control of credit, exchange-rate stability, acting as banker to the government and banks, and promoting economic growth and a sound financial system.

Meaning

The central bank is the supreme monetary authority of a country that controls, regulates and supervises its money and banking system. In India this role is performed by the Reserve Bank of India (RBI). Its working is directed towards the following objectives.

Objectives of the Central Bank

1. Issue and regulation of currency — to issue currency notes and keep the supply of money suited to the needs of the economy.
2. Monetary and price stability — to maintain a stable value of money by controlling inflation and deflation, so that prices do not fluctuate violently.
3. Control of credit — to regulate the volume and direction of credit created by commercial banks, using quantitative and qualitative methods.
4. Exchange-rate and external stability — to maintain a stable external value of the currency and to manage the foreign exchange reserves.
5. Banker to the government — to act as banker, agent and financial adviser to the central and state governments and to manage public debt.
6. Banker's bank and lender of last resort — to keep the reserves of commercial banks, help them in difficulty and act as the lender of last resort. …