Central Bank is a banker to the government.

Ans.  Bankers to the Government: -The Central bank performs the following –

a.      It transacts all banking business of the Central Governments. It accepts money on account of the government and makes payment on behalf of the government.

b.      It makes temporary advances to the government.

c.       It makes extraordinary advances to the government during emergencies.

d.      It manages public debt and is responsible for issue of new loans.

e.       It advises the government to take measures to control inflation