Q.Identify, which one of the following is not a function of Reserve Bank of India as a bank, agent and advisor to the government. Options : (A) Carries out banking business of the government. (B) Manages national debt. (C) Advises on financial matters. (D) Conducts periodic inspections.

The Reserve Bank of India performs three roles vis-à-vis the government: as its banker, as its agent, and as its advisor.

As banker to the government, the RBI carries out all banking business — it maintains the government's accounts, receives revenues, makes payments on behalf of the government, and provides short-term credit when needed. As agent, it manages the national debt: it floats loans, services them (pays interest and principal), and handles the issue and redemption of government securities. As advisor, the RBI advises the government on all financial and monetary matters, including policy formulation, exchange rate management, and fiscal strategy. …

The Reserve Bank of India wears many hats, but the question isolates one specific role: its relationship with the government. When the RBI serves as "bank, agent and advisor," it performs three distinct services for the Union and state governments.

As banker to the government, the RBI maintains the government's accounts — receiving revenues, making payments on behalf of ministries, and handling day-to-day cash management. Think of it as the government's current account: tax collections flow in, salaries and subsidies flow out, all routed through the central bank. This is option (A).

As agent, the RBI manages the government's borrowing program. When the Centre needs to raise funds, it issues securities (treasury bills, dated securities); the RBI conducts these auctions, services the interest payments, and handles redemptions at maturity. This debt-management function — ensuring the government can borrow smoothly and at reasonable cost — is captured in option (B).

As advisor, the RBI offers expert counsel on monetary policy, exchange-rate strategy, financial-sector reforms, and macroeconomic stability. The Finance Ministry consults the RBI before major policy announcements; the Governor sits on key committees. This is option (C). …