Q.State any three supervisory functions performed by the RBI over commercial banks.

The RBI's supervisory role exists specifically to protect depositors and keep the banking system financially sound, and operates through a defined set of statutory powers. …

The RBI's supervisory functions exist to protect depositors and keep the banking system sound. Any three:

1. Licensing of banks — under the Banking Regulation Act, 1949, no bank can commence business in India without an RBI licence, allowing the RBI to screen out unsound or unfit applicants before they can accept public deposits.
2. Inspection and supervision — the RBI regularly inspects every bank's books and affairs to check its solvency, liquidity, and compliance with prudential norms.
3. Control over management — the RBI's approval is required for the appointment, reappointment, or removal of a bank's Chairman/Managing Director in specified circumstances, to keep unfit persons out of key positions.
4. Control over mergers, amalgamations and liquidation — the RBI can direct or approve the merger of a weak bank into a stronger one, protecting depositors rather than letting a weak bank simply collapse. …

Confusing the RBI's supervisory functions (regulating banks) with its developmental functions (promoting institutions like NABARD/ …