Functions of central bank are :

(A) SLR

(B) CRR

(C) Open market operations

(D) Banker's Bank

(E) Issue of currency

Choose the correct answer from the options given below :

(D) and (E) only

The correct answer is option (1) : (D) and (E) only

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.

The functions of the central bank are :

(D) Banker's Bank : The central bank acts as a banker to other banks, providing various banking services such  as holding their deposits, providing loans, and clearing their transactions.

(E) Issue of currency : The central bank has the sole authority to issue currency in the country.

Options (1), (2), and (3) do not correctly represent the functions of the central bank. SLR (Statutory Liquidity Ratio), CRR and Open Market Operations are tools used by the central bank to regulate the money supply, but they are not functions of the central bank.