Role and Functions of Reserve Bank of India for Ras /Rts Mains and ras/rts Prelims Examination

<<–2/”>a >h3>Role of RBI

	Pre-reform	Post-reform
Developmental Role: the developmental role has increased in view of the changing structure of the economy with a focus on SMEs and Financial Inclusion	Priority Sector Lending: Introduced from 1974 with Public Sector Banks. Extended to all Commercial Banks by 1992	In the revised guidelines for PSL the thrust is on ensuring adequate flow of bank credit to those sectors that impact large segments of the Population and weaker sections, and to the sectors which are EMPLOYMENT intensive such as agriculture and small enterprises
	Lead Bank Scheme	Special Agricultural credit Plan introduced.
		Kisan Credit Card scheme (1998-99)
		Focus on credit flow to micro, small and medium enterprises development
		Financial Inclusion
Monetary Policy: the role of RBI has changed from regulating credit and Money flow directly to using market mechanisms for achieving policy targets. MP framework has changed to promote financial deregulations and market development. Role as a facilitator rather than as principal actor.	M3 as an intermediary target	Multiple Indicator Approach
	Regulation of Foreign Exchange	Management of foreign exchange
	Direct credit control	Open Market Operations, MSS, LAF
	Rupee convertability highly managed	Full current ac convertability and some Capital Account convertability
Banker to the government	Monetary policy was linked to the Fiscal Policy due to automatic monetisation of the deficit	Delinking of monetary policy from the fiscal policy. From 2006, under FRBM, RBI ceased to participate in the Primary Market auctions of the central government’s securities.
As regulator of financial sector: As regulator of the financial sector, RBI has faced the challenge of regulating the increasing financial sector in India. Credit flows have increased. RBI had to make sure that financial institutions are regulated in a way to protect the consumers while not impeding economic Growth.	Reduction in SLR
Custodian of FOREX reserves		Forex reserves have increased drastically. Need to manage it adequately and avoid inflationary impact
Inflation	Direct instruments were used	Multiple indicators
Financial Stability	Closed economy	Increased FDI and FII has made financial stability one of the policy objectives.
Money Market		Narsimhan Committee (1998) recommended reforms in the money market

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The Reserve Bank of India (RBI) is the central bank of India. It was established on 1 April 1935 in accordance with the Reserve Bank of India Act, 1934. The RBI is the banker to the government of India and the banker’s bank. It is also the issuer of the Indian rupee.

The RBI has three main objectives:

To maintain price stability
To promote economic growth
To ensure financial stability

The RBI performs a number of functions in order to achieve its objectives. These functions include:

Monetary policy: The RBI sets monetary policy in order to control the Money Supply and inflation.
Exchange rate management: The RBI manages the exchange rate of the Indian rupee.
Banking regulation and supervision: The RBI regulates and supervises banks in India.
Payment and settlement systems: The RBI operates the payment and settlement systems in India.
Financial Markets development: The RBI promotes the development of financial markets in India.
Currency management: The RBI manages the currency in circulation in India.
Consumer protection: The RBI protects the interests of consumers in the financial sector.
Research and statistics: The RBI conducts research and publishes statistics on the Indian economy.
Human Resources management: The RBI manages its human resources.
Information technology: The RBI develops and maintains information technology systems.
International relations: The RBI represents India in international financial institutions.
Financial stability: The RBI promotes financial stability in India.
Disaster Management: The RBI plans and implements measures to mitigate the impact of disasters on the financial system.
Corporate social responsibility: The RBI undertakes activities to promote social and environmental responsibility.

The RBI is a statutory body governed by a board of directors. The board is appointed by the government of India. The RBI is headquartered in Mumbai, with offices in all major cities in India.

The RBI is a powerful institution with a wide range of responsibilities. It plays a key role in the Indian economy and has a significant impact on the lives of Indians.

The RBI has been praised for its role in maintaining price stability and promoting economic growth. However, it has also been criticized for its handling of the 2008 financial crisis and for its role in the demonetization of the â¹500 and â¹1,000 notes in 2016.

Despite these criticisms, the RBI remains a respected institution and plays a vital role in the Indian economy.

The Reserve Bank of India (RBI) is the central bank of India. It was established on April 1, 1935, in accordance with the Reserve Bank of India Act, 1934. The RBI is headquartered in Mumbai, Maharashtra.

The RBI is the banker to the government of India and the banker’s bank. It is also the issuer of the Indian rupee. The RBI is responsible for formulating and implementing monetary policy, regulating the financial system, and promoting financial stability.

The RBI is governed by a central board of directors, which is appointed by the government of India. The RBI has three main functions:

Monetary policy: The RBI is responsible for formulating and implementing monetary policy. Monetary policy is the use of interest rates and other tools to control the money supply and inflation.
Financial regulation: The RBI is responsible for regulating the financial system. This includes regulating banks, non-banking financial companies, and Stock Exchanges.
Financial stability: The RBI is responsible for promoting financial stability. This includes monitoring the financial system for risks and taking steps to mitigate those risks.

The RBI is also responsible for a number of other functions, including:

Foreign exchange management: The RBI is responsible for managing India’s foreign exchange reserves.
Banking supervision: The RBI is responsible for supervising banks and other financial institutions.
Payment systems: The RBI is responsible for operating and regulating India’s payment systems.
Currency management: The RBI is responsible for managing India’s currency.
Economic research: The RBI conducts economic research and publishes reports on the Indian economy.

The RBI is a powerful institution with a wide range of responsibilities. It plays a key role in the Indian economy and is an important part of the country’s financial system.

Here are some frequently asked questions about the RBI:

What is the Reserve Bank of India?
The Reserve Bank of India (RBI) is the central bank of India. It was established on April 1, 1935, in accordance with the Reserve Bank of India Act, 1934. The RBI is headquartered in Mumbai, Maharashtra.
What are the functions of the RBI?
The RBI has three main functions:
Monetary policy: The RBI is responsible for formulating and implementing monetary policy. Monetary policy is the use of interest rates and other tools to control the money supply and inflation.
Financial regulation: The RBI is responsible for regulating the financial system. This includes regulating banks, non-banking financial companies, and stock exchanges.
Financial stability: The RBI is responsible for promoting financial stability. This includes monitoring the financial system for risks and taking steps to mitigate those risks.
Who governs the RBI?
The RBI is governed by a central board of directors, which is appointed by the government of India. The RBI has three main functions:
Monetary policy: The RBI is responsible for formulating and implementing monetary policy. Monetary policy is the use of interest rates and other tools to control the money supply and inflation.
Financial regulation: The RBI is responsible for regulating the financial system. This includes regulating banks, non-banking financial companies, and stock exchanges.
Financial stability: The RBI is responsible for promoting financial stability. This includes monitoring the financial system for risks and taking steps to mitigate those risks.
What are some of the other functions of the RBI?
The RBI is also responsible for a number of other functions, including:
Foreign exchange management: The RBI is responsible for managing India’s foreign exchange reserves.
Banking supervision: The RBI is responsible for supervising banks and other financial institutions.
Payment systems: The RBI is responsible for operating and regulating India’s payment systems.
Currency management: The RBI is responsible for managing India’s currency.
Economic research: The RBI conducts economic research and publishes reports on the Indian economy.
What is the importance of the RBI?
The RBI is a powerful institution with a wide range of responsibilities. It plays a key role in the Indian economy and is an important part of the country’s financial system.

The Reserve Bank of India (RBI) was established on:
(A) 1 April 1935
(B) 1 January 1935
(C) 1 November 1934
(D) 1 December 1934
The head office of the RBI is located in:
(A) Mumbai
(B) New Delhi
(C) Chennai
(D) Kolkata
The RBI is:
(A) A private bank
(B) A public sector bank
(C) A central bank
(D) A commercial bank
The RBI is the central bank of:
(A) India
(B) Pakistan
(C) Bangladesh
(D) Sri Lanka
The RBI is responsible for:
(A) Monetary policy
(B) Fiscal policy
(C) Trade Policy
(D) Industrial Policy
The RBI issues:
(A) Currency notes
(B) Coins
(C) Both currency notes and coins
(D) None of the above
The RBI regulates:
(A) Commercial banks
(B) Non-banking financial companies
(C) Both commercial banks and non-banking financial companies
(D) None of the above
The RBI is the lender of last resort to:
(A) Commercial banks
(B) Non-banking financial companies
(C) Both commercial banks and non-banking financial companies
(D) None of the above
The RBI is responsible for:
(A) Maintaining price stability
(B) Promoting economic growth
(C) Maintaining financial stability
(D) All of the above
The RBI is a member of:
(A) The Bank for International Settlements (BIS)
(B) The International Monetary Fund (IMF)
(C) The World Bank
(D) All of the above