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What are the main functions of Reserve Bank of India?

Jan 9, 2015 17:24 IST

    Question: What are the main functions of Reserve Bank of India?

    Monetary Authority

    • RBI formulates, implements and monitors the monetary policy.
    • The main objective is maintaining price stability and ensuring adequate flow of credit to productive sectors.

    Regulator and supervisor of the financial system

    • Set down broad parameters of banking operations within which the country's banking and financial system functions.
    • Objective: maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public.

    Management of Foreign Exchange

    • Manages the Foreign Exchange Management Act, 1999.
    • Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

    Issuer of currency

    • Issues and exchanges or destroys currency and coins not fit for circulation.
    • Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

    Developmental role

    • Performs a wide range of promotional functions to support national objectives.

    Related Functions

    • Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
    • Banker to banks: maintains banking accounts of all scheduled banks.

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