Functions of RBI – Reserve bank Of india

Functions of Reserve bank Of India

Functions of reserve bank of India (RBI) are mentioned below

  • Monetary policy
  • Regulation and supervision of the banking and non-banking financial institutions, including credit information companies
  • Regulation of money, forex and government securities markets as also certain financial derivatives
  • Debt and cash management for Central and State Governments
  • Management of foreign exchange reserves
  • Foreign exchange management—current and capital account management
  • Banker to banks
  • Banker to the Central and State Governments
  • Oversight of the payment and settlement systems
  • Currency management
  • Developmental role
  • Research and statistics

The functions of RBI are classified in below criteria.

  • Traditional Functions
  • Promotional & Developmental Functions
  • OtherFunctions
  • Prohibitory Functions
functions of reserve bank of india

functions of reserve bank of India

The Reserve Bank of India (RBI) is the central bank for India. A central bank is an institution that manages the currency, money supply, and interest rates of a state or formal monetary union, and oversees their commercial banking system. For India RBI govern all of these functions. RBI has the highest autonomy in India in financial matters. It is established under RBI act 1934. In December 2018, Shaktikanta Das was appointed the new RBI governor.

Traditional Functions of RBI

  • Issue of Currency
  • Banker to Government
  • Banker’s Bank
  • Exchange Management& Control
  • Control of Credit
  • Collection & Publication of Data & Reports
  • Training facilities
traditional functions of RBI

         Traditional functions of RBI

  • The issue of Currency is controlled by RBI. Act As currency authority in India.
  • Banker to Government: RBI act as banker to central and state government. It distributes money between them. RBI Maintains and operates the cash balances of the central & state govt. It Receives and makes payments on behalf of the Central& State govt.s
    It Carries out an exchange, remittance, and other banking operations on behalf of them. RBI Buys and sells govt. securities in the market. It also manages public debt by issuing govt. loans and paying interest and principal.
  • Banker’s Bank: RBI works as a bank between other banks in India. It is Banker’s bank.
  • Exchange Management & Control: Manages Foreign exchange reserves and
    Control external value of rupee
  • Control of Credit: Controls money supply and credit to ensure price stability & meet varying economic conditions of the country.
  • Collection & Publication of Data & Reports 
  • Training facilities

Promotional &Devolopmental Functions of RBI

promotional functions of RBI

promotional functions of RBI

For Promotional and development functions of  RBI

  • Provides advice and financial help for the department of agriculture and allied rural activities.
  • Provide Industrial Finance
  • Provide Export Credit
  • Provide credit to weaker and priority sector
  •  The judicious policy of regulation & control of banks

Other Functions of Reserve bank of India

The other functions include below things,

  • Issues demand drafts, and make, issues and circulate bank post-bills.
  • Borrows money from a scheduled bank in India/other countries
  • Make agency agreement with central banks in other countries, act as agent and invest funds in their shares
  • Purchases and sell gold and bullion

Prohibitory functions of Reserve bank of india

These functions include

  • Not for competing with other banks
  • For keeping its assets in liquid form to meet any eventuality
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