The Reserve Bank of India (RBI) functions as both the 'Banker’s Bank' and 'Supervisor' for other financial institutions.
Banker’s Bank: As banker to all scheduled commercial banks, the RBI offers short-term financing, serves as the ultimate lender in times of crisis, and manages inter-bank settlements.
Supervisor: The RBI oversees and regulates banks to safeguard financial stability. This involves monitoring adherence to banking rules, managing non-performing assets (NPAs), and ensuring banks hold the necessary reserves. These actions are crucial for maintaining financial system stability and liquidity.