Question : Assertion (A) Central Bank as a banker to the government, works as a custodian of cash reserves.
Reason(R) The Central Bank acts as a clearinghouse for the transfer and settlement of mutual claims of commercial banks.
Option 1: Both Assertion (A) and Reason(R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason(R) are true, but Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true, but Reason (R) is false.
Option 4: Assertion (A) Is false, but Reason (R) is true.
Correct Answer: Both Assertion (A) and Reason(R) are true, but Reason (R) is not the correct explanation of Assertion (A)
Solution : The correct answer is (b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Assertion is true as the Central Bank holds and manages the cash reserves of the government, ensuring their safety and availability.
Reason is also true as the Central Bank facilitates the settlement of payments and interbank transactions, ensuring the smooth functioning of the banking system.
While both statements are true, Reason (R) does not directly explain Assertion (A). The custodianship of cash reserves by the Central Bank and its role as a clearinghouse for commercial banks' claims are separate functions. Hence, Reason (R) is not the correct explanation of Assertion (A).
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