Advantages And Disadvantages Of Central Banks

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• Dealing with Credit: The banks are the institutions that can create credit i.e., creation of additional money for lending. Thus, “creation of credit” is the unique feature of banking. • Commercial in Nature: Since all the banking functions are carried on with the aim of making profit, it is regarded as a commercial institution. • Nature of Agent: Besides the basic functions of accepting deposits and lending money as loans, banks possess the character of an agent because of its various agency services. 3.2 CLASSIFICATION OF BANKS Today is the age of specialization and we can find specialization in all fields including banking. The banks have specialized in a particular line of finance. Banks are generally classified on the basis of the…show more content…
It controls the entire banking system of a country. Its main function is to issue currency known as ‘Bank Notes’. This bank acts as the leader of the banking system and money market of the country by regulating money and credit. Its act as the central monetary authority. These banks are the bankers to the government, they bankers banks and the ultimate custodian of a nations foreign exchange reserves. The aim of the Central Bank is not to earn profit, but to maintain price stability and to strive for economic development with all round growth of the country. The Central Bank of different countries is known by different names like Reserve Bank in India, Bank of England in U.K., Federal Reserve System in U.S.A.,…show more content…
They grant short-term loans to the agriculturists for purchase of seeds, harvesting and for other cultivation expenses. They accept money on deposit from and make loans to their members at a low rate of interest. Land-Mortgage Banks: Presently known as agriculture and rural development banks, they are agriculture development banks. The land-mortgage banks supply long-term loans for a period up to 15 years for development of land to improve agricultural yields. They grant loan for permanent improvements in agricultural lands. They create negotiable bonds out of real estate like land, buildings, etc., they
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