Commercial Applications
Which of these is NOT a function of Central bank?
- Controlling credit
- Credit creation
- Providing Clearing house facility
- Maintenance of Exchange rate
Banking
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Answer
Credit creation
Reason — Credit creation is a function of commercial banks, NOT the central bank. As shown in the differences between Central Bank and Commercial Bank: "Central bank controls credit in the country" while "Commercial bank creates credit for customers." The central bank's job is to control credit through tools like CRR, SLR, bank rate and open market operations, not to create it. Controlling credit, providing clearing house facility and maintenance of exchange rate are all functions of the central bank.
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