RBI-Reserve Bank of India - Function and Role .

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What is RBI ?

Reserve Bank of India (RBI) is India’s central bank. It controls the monetary policy concerning the national currency, the Indian rupee. The basic functions of the RBI are the issuance of currency, to sustain monetary stability in India, to operate the currency, and maintain the country’s credit system.  

Functions of Reserve Bank of India

Reserve Bank of India works as:

Monetary Authority

  • Implementation of monetary policies.
  • Monitoring the monetary policies
  • Ensuring price stability in the country considering the economic growth of the country

Also, read about the Monetary Policy Committee (MPC) and know more about this six-member committee.

Regulator and Administrator of the Financial System

  • The RBI determines the comprehensive parameters of banking operations.
  • These methods are responsible for the functioning of the country’s banking and financial system. Methods such as:
    • License issuing
    • Liquidity of assets
    • Bank mergers
    • Branch expansion, etc.

Managing Foreign Exchange

  • RBI manages the FOREX Reserves of India.
  • It is responsible for maintaining the value of the Rupee outside the country. 
  • It aids foreign trade payment. 
  IMPORTANCE OF RBI 

RBI’s Developmental role

  • Promotional functions that support national objectives are organized by RBI that encourage rural and agricultural economic development.
  • The RBI will regularly issue directives to the commercial banks to lend loans to small-scale industrial units. 

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