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Explain the following:

  1. Central Bank
  2. Commercial banks
  3. Cooperative banks

Asked by Topperlearning User 5th June 2015, 9:46 AM
Answered by Expert
  1. Central bank: The Reserve Bank of India is the Central Bank of the country and controls the whole banking system. It has the sole authority to issue notes in the country. It acts as a banker to the government and controls the supply of money in the country.


  1. Commercial banks: Commercial banks are the banks which have been established under the Companies Act, 1913. The main function of a commercial bank is to accept deposits from the public and lend money to business firms. The State Bank of India is the largest commercial bank in India. These banks are broadly classified into public sector banks, private sector banks and regional rural banks. 


  1. Cooperative banks: Cooperative banks or cooperative credit societies are a formal source of credit. These banks were originally set up at the village level to promote savings by the farmers and to meet their credit requirements. The rate of interest charged by the cooperative societies is much lower than that charged by informal moneylenders. These banks are based on the three-tier system. State cooperative banks act as an apex institution in the state, central cooperative banks work at the district level and the primary credit society at the village level.
Answered by Expert 5th June 2015, 11:46 AM
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