While undertaking the role of banker for, both the Central and State Governments, the RBI also provides temporary support to tide over mismatches in their receipts and payments in the form of short-term advances. The Reserve Bank plays a significant role as Advisor to Central and State governments on federal fiscal relations. The Reserve Bank sensitizes the State Government on important fiscal issues.
The debate around those laws, in the 1930s, was not an academic one, because the pain and suffering of that era was evident—at the time Congress was debating the Banking Act of 1935, which established the modern framework for the federal bank regulation and supervision, the unemployment rate in the United States was still 20 percent.