As a banker's bank, central bank works in a similar way as commercial banks deals with its customers. It accepts deposits from the commercial banks and offers them loans. The central bank also provides 'clearing house' facility to the commercial banks. It is a cheque clearing facility provided at one centre to all the banks. Central bank is the custodian of their cash reserves. Banks of the country are required to keep a certain percentage of their deposits with the central bank and in this way the central bank is the ultimate holder of the cash reserves of commercial banks.