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Why the reserve bank of india supervises the functioning of formal sources of loan ?

Why the Reserve Bank of India supervises the functioning of formal sources of loan ?


i)It ensures that the banks actually keep a certain % of their deposits as cash balance/cash reserve with the Central bank.
ii) It observes that banks give loans to small activators, small scale industries, small borrowers also and not become a profit making business.
iii)Report has to be submitted periodically by the banks to RBI containing details such as how much they have lent, to whom and at what rate of interest etc.
iv)Central Banks is the lender of the last resort. Whenever banks are short of funds, they can take loans from the Central Banks. Thus it is source of great strength to the banking system.
v)It acts as a bank of central clearance settlements and transfers.


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