RBI- Roles and Functions

BY:

HUMANSHI BAJAJ
O J A S V I C H AW D A
YA S H A S V I S I N G H
M R U N M AY I V O D I T E LWA R
What is RBI ?

Reserve Bank of India (RBI) is a India’s central bank and

regulatory organizations in charge of banking regulation. It
belongs to the Indian government’s Ministry of Finance.
RBI controls the monetary policy concerning the national
currency, Indian Rupee.
Roles of RBI
Monetary Management – The formulation and seamless execution of monetary policy are one of the
Reserve Bank of India’s main responsibilities. Various policy instruments are used by monetary policy
to impact the cost and availability of money in the economy. The goal remains to encourage economic
growth while maintaining price stability. It assures a steady supply of credit to the economy’s
productive sectors.
The issuer of Currency – Currency management and issuance are critical central banking functions.
The Reserve Bank of India (RBI) is in charge of the country’s currency design, manufacture,
distribution, and overall management. It aims to ensure that the state has a sufficient supply of clean
and legitimate notes. Its goal is to lower the risk of counterfeiting. Counterfeit notes are frequently
used for terrorist financing, which has a variety of negative consequences.
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Banker and debt manager of the Government – The Reserve Bank of India (RBI) is in charge of the
government’s banking transactions. The Reserve Bank of India also holds the cash holdings of the
Indian government. It can also serve as a lender to state governments. It appoints other banks to act as
its agents in carrying out the government’s transactions. On behalf of the federal and state
governments, it also manages public debt and offers new loans.
Banker to Banks – The RBI is also responsible for the settlement of interbank transactions. This is
normally accomplished through the employment of a “clearing house,” which allows banks to present
cheques and other similar instruments for clearing. The central bank serves as a common banker for all
of the banks.
Developmental Role – The Reserve Bank of India (RBI) actively supports and enhances development
efforts in the country. It guarantees that the productive sectors of the economy have access to sufficient
credit and establishes organisations to support the development of financial infrastructure. It also tries
to ensure that everyone has access to banking services.
Oversees Market Operations – The Central Bank implements its monetary policy through government
securities, foreign exchange, and money market operations. It also regulates and develops market
instruments such as the term money market, repo market, and others.
Functions of RBI
Monetary Authority: It plans and supervises the monetary policies designed for
the country. The objective behind this is that every policy should be designed
keeping in mind the idea of growth and at the same time should also maintain
price stability.
Financial System Supervisor: It designs the parameters under which all the
banks of the country should work. The main aim here is to maintain the trust of
the general public in the financial system of the country and provide them
services which are cost-friendly.
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Foreign Exchange: All the foreingn exchange that happens between the countries is maintained
and looked after by RBI. This is done so that easy and smooth foreign trade can happen and also
foreign market remains maintained.
Issuer of currency: RBI is the authority who issues notes, destroys the old notes and decides
which currency is fit for circulation among the people. Demonetisation was done after taking
advice from RBI and the new notes of 2000 came into circulation.
 Development: various national projects are funded by RBI. It undertakes development of the
country as its objective and invests at various places in national interest.