Memorandum of understanding (MoU) will enable the Reserve Bank of India to function as the banker, debt manager and financial agent of the Delhi government.
- Functions such as the management of the public debt of the state are carried out by RBI in terms of the agreement entered into with the State Governments.
- As of now, such agreements exist between RBI and all the State Governments except Government of Sikkim.
Role of RBI as Banker to Government
- For Central government: RBI has the obligation to undertake the receipts and payments and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union (Under Section 20 of RBI Act, 1934).
- Issue Securities: RBI helps raise finances through government securities.
- The Central Government can issue both, treasury bills and bonds (or dated securities).
- While the State Governments can issue only bonds (or dated securities), which are called the State Development Loans (SDLs).
- RBI also maintains the Principal Accounts of Central as well as State Governments at its Central Accounts Section, Nagpur.
Other functions of RBI
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