Supervisory of the functioning of commercial banks is done by the Reserve Bank of India in following ways:

(i) The functioning of formal sources of loans.

(ii) It looks over the banks in maintenance of cash balance.

(iii) It also keeps on checking that the banks instead of giving loans only to the profit making businesses and to the traders, they also provide loans to the small scale industries, small cultivators, small borrowers etc.

(iv) With the passage of time the bank submits the information regarding lending and interest rates etc.