Developmental Role of RBI
The Reserve Bank of India works for the development of Indian Economy. The RBI provide credit facilities to the priority sectors and weaker sections for development. The Reserve Bank of India implemented developmental and promotional steps. The Reserve Bank of India always try to implement development activities in the India. The RBI is central Bank for India.
The Developmental Role of RBI includes,
- Ensure credit to priority sectors of the economy
- creation of institutions to build financial infrastructure
- expand access to affordable financial services
- Institution building for facilitating the availability of diversified financial services in India
- Encourage efficient customer service of Indian banking industry
- Extension of banking service to all
Also read, Detailed Information on Works of RBI
The Reserve Bank of India take necessary step to play developmental role. The developmental role of RBI wanted to ensure financial inclusion. The promotional and developmental role of RBI discussed below in detail.
The Rural Indian Economy dependent on Agricultural activities. The Rural Credit flow will insure growth of larger population of India. The Reserve Bank of India set developmental agenda of Rural economy. RBI provide affordable and adequate lending in Rural India.
The RBI provide guidance to NABARD. The regional rural Bank known as RRBs work for implementation of the rural credit schemes. The Kishan Credit card provided to the farmer which insure fixed credit facility to the farmer. The limit of credit for farmer reviewed after every 3 year.
Priority Sector Lending
The Ministry of Finance and RBI set agenda for priority sector lending. The limit for priority sector lending decided by Ministry of Finance and RBI after mutual understanding. The priority and weaker sector of Indian Economy identified by RBI with the help of research and statics information. The priority sector include agriculture, micro and small enterprises sector, microcredit, education and housing.
The priority sector lending will help them to grow faster. The priority sector lending by Government owned Banks and other private scheduled Banks. The guidelines on lending to priority sector were regulated by Indian Government and RBI. The priority sector lending impact large population of India. The weaker sector also provided credit assistance. The example of weaker sector is agriculture sector of India.
Natural Calamities – Relief Measures
The Reserve Bank of India set rules and regulation for the Bank regarding how to deal with credit during natural calamities. The Bank’s provide relief measures to the affected customers. The Bank provide relief by rescheduling of short-term loans. During Natural Calamities, on customer request the Short term loans can be converted into term loans.
In 2020, During corona crisis, RBI introduced moratorium facilities for individual and corporate clients. The Reserve Bank of India also set rules and regulation for the Loan Moratorium. In corona crisis, RBI directed Bank to give credit facilities to retail and corporate customer.
The Export sector play important role in country’s economy. For the export of goods and service, the individuals, corporate clients need export credit. The Reserve Bank of India always supported export industry. The Export sector of India provide employment to the larger population.
The RBI set up Export Import Bank of India known as EXIM Bank. The credit policy framework regulated by RBI. The Export credit provided to exporters on a priority basis.
Promotional Role of RBI
The Reserve Bank of India do promotional activities for the access of credit. The RBI lend rural credit for promotional activities in Rural area. The RBI set target for total priority sector advances, Small enterprise advances & Total agricultural advances. The RBI provide Export credit for the trade facilitation. The RBI set agenda for the advance for the weaker section of Indian economy.
The Bank provide promotional role to the Micro, Small and Medium Enterprises. MSME are offered Collateral Free Loans, Credit Guarantee Scheme for Small Industries by SIDBI, Formulation of “Banking Code for MSE Customers”.
Extension of banking service to all – Financial Inclusion
The Indian Banking sector liberalized for the private players. The Liberalization opened door of Indian Banking sector to the private players. The Entry of new private players provided better facilities, new technologies and better service to the customer. But RBI realized that larger part of Indian population still away from banking systerm.
The Reserve Bank of India set agenda for the Banking service to all. The Prime Minister of India Shree Narendra Modi announced Pradhan Mantry Jan Dhan Yojana for the financial inclusion. The RBI set rules and regulation to allow larger population affordable banking. The Reserve Bank of India also introduced Rupee debit card at lower price then other competitor.
The Developmental role of RBI set agenda for the creating machinery needed for financial department of India. The Developmental role of RBI also ensure financial flows in social desired directions. The Promotional and developmental role of RBI ensure financial inclusion of the Indian Population. The Rural credit, priority sector lending, Kishan Credit card, Export Credit type developmental action taken by RBI.