Which of the following is not a function of the Central Bank
Answer Details
Granting loans to the public is not a function of the Central Bank.
A Central Bank is the apex financial institution of a country that is responsible for formulating and implementing monetary policy. The Central Bank plays a vital role in maintaining the stability of the financial system and promoting economic growth.
The following are the functions of the Central Bank:
- Banker to the government: The Central Bank acts as the government's banker by managing its accounts and handling transactions on its behalf. It also manages the government's debt and provides advice on economic policy.
- Banker's bank: The Central Bank serves as a lender of last resort for commercial banks, providing them with liquidity in times of need. It also regulates and supervises banks to ensure their stability and soundness.
- Issuance of currency notes: The Central Bank is responsible for issuing and managing the country's currency notes and coins.
- Formulating and implementing monetary policy: The Central Bank sets interest rates and manages the money supply to achieve its monetary policy objectives, such as price stability and full employment.
Granting loans to the public is not a function of the Central Bank. While the Central Bank may provide loans to commercial banks, it does not typically lend to individuals or businesses directly. That function is usually performed by commercial banks, which obtain their funds from various sources, including deposits from the public, loans from other banks or financial institutions, and borrowing from the Central Bank.
Therefore, the correct option is "Granting loans to the public."