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What are the main functions of Reserve Bank of India?

Important banking qna for banking aspirants, which is helpful in banking exam.

Jan 9, 2015 17:24 IST
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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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