XII Banking - Question 6 - Central Bank

Q.6. Define a Central Bank.

CENTRAL BANK
A banking system of a country without a central bank at the top in like a human body without a head. In the words of R.P. Kene ‘’’central bank is an institution charged with the responsibility of managing the entire monetory and banking affairs of the country in the nation’s interest.

The Central bank is generally recognized as a bank which constitutes the apex of its monetory structure, controls, directs and equalates the activities of other banks operating in the economy. A central bank has direct dealings with the governments and other banks. It is a separate branch of banking having distinct functions quite different from other banks. It operates not for profit sake. But with an objective of bring in economic prosperity to the people and ensuring economic stability in the country.