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Q.

The  Central bank is responsible for supervising the


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a

Formal sources of credit

b

Informal sources of credit

c

Both 1 and 2

d

None of these 

answer is A.

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Detailed Solution

The Central bank is responsible for supervising the formal sources of credit in its respective country. In the case of India, the Reserve Bank of India performs this function. For instance, the Reserve Bank of India requires commercial banks in the country to maintain a minimum cash balance out of the deposits kept with them. The RBI checks on the banks regularly to see whether they are maintaining such balance or not.
Similarly, the RBI requires the banks to lend to profit-making businesses and micro and small enterprises.
 
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