Functions of Reserve Bank of India
Conduct Monetary Policy:
The Reserve Bank of India is in charge of overseeing monetary policies,
as well as their formulation and execution. It seeks to maintain price stabilization in the country by
implementing inflation control recommendations for the government. It is responsible for governing the
country’s monetary structure and ensuring that inflation prices are limited by the use of money supply,
interest rates, and credit availability.
Note issuance:
The bank has only authority to print the country’s monetary notes except for one rupee
note (which is issued by the Ministry of Finance). It has exclusive authority to issue currency notes of
different denominations
Banker to the Government:
The Reserve Bank’s second major role is to be Banker, Agent, and
Advisor to the Indian and state governments. It handles all of the State and Central Government’s banking
functions, as well as providing valuable economic and monetary policy guidance to the government. It is
also in charge of the government’s public debt.
·
Banker’s Bank:
For most commercial banks, the Reserve Bank executes the same activities that
most banks normally do for their clients. Reserve Bank of India loans money to the country’s business
banks.
·
Regulation in other banks:
It not only serves as a banker to other banks, but it also oversees their
operations by conducting investigations of them, regulating the opening of their branches, and issuing
them licenses for specific activities. The RBI’s power to issue licenses stems from Section 22 of the
Banking Companies Act of 1949.
·
Credit controller:
The Reserve Bank of India is in charge of regulating commercial banks’ credit
development. To regulate the excess money in the economy, the RBI employs two strategies. These
techniques include both quantitative and qualitative techniques for controlling and regulating the
country’s credit flow. When the RBI notices that the economy has a enough money supply and that this
could lead to inflation, then they put the squeeze the money supply by its tight monetary policy and vice
versa.