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Bank As An Agent Analysis

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BANK AS AN AGENT
INTRODUCTION
Given the fact that money is just a system that helps the barter of goods and services, by providing a common currency to exchange or deal with, the role of banks in society and economy has been important. A bank is a financial intermediary that accepts deposits and converts those deposits into lending and borrowing activities, either directly by loaning or indirectly using capital markets. A bank forms or acts as a link between customers that have capital deficits and customers with capital surpluses and hence serves as an intermediary or agent for the customers. Banks play a role as the agents of economy development in an economy. Due to their importance in financial systems, they needed to be highly regularised …show more content…

The purpose of the central bank of a country is to control and monitor the banking and financial system of the country. In India, the Reserve Bank of India (RBI) is the Central Bank. The RBI was instituted in 1935. It was declared as a national bank on 1949. The RBI plays role of regulator of the banking system in India. The Banking Regulation Act 1949 has given the RBI the power and also the responsibility to regulate the banking system. RBI acts as the intermediary between the government and the people, often acting as the government’s agent for the people and as a way for the government to implement its’ policies.
• Central bank (RBI) as the regulator of financial system
The RBI regulates the Indian banking and financial systems by deciding basic rules and guidelines for the sector. It has functions such as controlling money supply in the economy, overviewing key indicators such as GDP and inflation, and maintaining customer confidence in the banking system. Here the RBI acts as an agent for economic development of the nation.
• RBI is the issuer of monetary policies and issuer of …show more content…

The central banks actually depend on the commercial bank to regulate and follow its monetary policies. They also contribute much to the agriculture; trade and industry by helping it increase its human and physical capital by providing the required funding through loans.

AGENT BANK
A bank that has been authorized by an individual to act on behalf of his or her as an agent is known as an agent bank. An agent bank would mostly provide services such as back-end operations, processing of credit applications, and authentication services. It also signifies a bank that act to some extent as an agent of another bank. It is also known as agency bank.
It can be any of the below mentioned three types.
• The bank in advance syndicate that advises supplementary giving banks of advances seized and adjustments in interest rates for an external or internal borrower
• A bank that participates in the credit card plan of one more bank by delivering credit cards and giving supplementary obligations (excluding financing card receivables)
• A external bank acting company in the U.S. on behalf of its parent bank, giving such tasks as delivering international letters of credit, but not consenting

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