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Role of rbi in banking

Updated: 9/16/2023
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14y ago

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RBI stands for Reserve Bank of India. RBI is the governing body for all banks in India. It supervises the operations of all banks that operate in India. They decide the interest rates, cash reserve ratio, liquidity issue etc that these banks are supposed to maintain. All banks in India are supposed to abide by the rules laid down by the RBI.

The main functions of RBI are:-

  • Formulate, implement and monitor the monetary policy with the objective of maintaining price stability and ensuring adequate flow of credit to productive sectors.
  • Regulate and supervise the financial system by prescribing the broad parameters of banking operations within which the system must function.
  • Manager foreign exchange in order to facilitate external trade and promote orderly development and maintenance of foreign exchange market in India.
  • Issues and exchanges or destroys currency and coins not fit for circulation, so as to give the public adequate quantity of supplies of currency notes and coins and in good quality.
  • Performs a wide range of promotional functions to support national objectives.
  • Banker to the Central and State Governments.
  • Banker to banks by maintaining banking accounts of all scheduled banks.
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