Explain the 'bankers' bank" function of the central bank.

The central bank of a country is the apex bank and regulates and monitors the working of all other commercial banks.

The central bank acts a banker to the other commercial banks, just as the commercial banks have a relationship with its customers.

The central bank receives deposits and extends loans to commercial banks as and when they required.

And this is the reason the central bank is known as the ‘bankers’ bank’.

The central bank acts a banker to the other commercial banks, just as the commercial banks have a relationship with its customers. The central bank receives deposits and extends loans to commercial banks as and when they required. And this is the reason the central bank is known as the ‘bankers’ bank’.