Which of the following is not a function of RBI?

A. Lender of last resort

B. Accepting deposits from general public

C. Open market operations

D. Moral Suasion

Choose the correct answer from the options given below :

B, C and D only

The correct answer is option (4) : B, C and D only

B. Accepting deposits from general public: The lending of money to the public is not the function of RBI but of commercial banks.

C. Open market operations : It is not a function of RBI but a tool used by RBI to control money supply.

D. Moral Suasion : It is not a function of RBI but a tool used by RBI to control money supply.

"Functions of RBI: Central Bank is a very important institution in a modern economy. Almost every country has one central bank. India got its central bank in 1935. Its name is the ‘Reserve Bank of India’. Central bank has several important functions. It issues the currency of the country. It controls money supply of the country through various methods, like bank rate, open market operations and variations in reserve ratios. It acts as a banker to the government. It is the custodian of the foreign exchange reserves of the economy. It also acts as a bank to the banking system.

Reserve Bank is the only institution which can issue currency. When commercial banks need more funds in order to be able to create more credit, they may go to market for such funds or go to the Central Bank. Central bank provides them funds through various instruments. This role of RBI, that of being ready to lend to banks at all times is another important function of the central bank, and due to this central bank is said to be the lender of last resort."