"Under the provisions stated in the Section 20 and Section 21 of the Reserve Bank of India (RBI) Act, 1934, the RBI is mandated to handle the banking operations of the Government of India." In the light of the given statement, elaborate the indicated function of the Reserve Bank of India.

Question

Accepted Answer

Based on Section 20 and 21 of RBI Act, 1934:

RBI's mandate for government banking operations:

1. Section 20:
- RBI is obligated to transact government business
- It acts as banker to central and state governments
- It manages government accounts

2. Section 21:
- RBI manages public debt
- It issues government securities
- It handles government's receipts and payments

Functions performed:
1. Accepts government deposits
2. Makes payments on behalf of government
3. Manages government securities
4. Implements government's financial policies
5. Provides short-term loans to government
6. Advises on fiscal matters

These provisions ensure efficient management of government finances and smooth implementation of fiscal policy.