Reserve Bank of India (RBI) is the Central Bank (Apex Bank) of India. RBI was established on 1st April 1935 due to enforcement of RBI Act 1934.
Being a statutory body RBI is not only accountable for regulating the various financial institutions in India but also it performs various other functions which are explained below.
(1) Issuing, Printing and Circulation of Currency Notes:
- Commercial banks
- Cooperative banks
- NBFCs (Non-Banking Finance Company)
- MFI (Micro Finance Institutions)
- Authorised Dealers of Forex
- Recovery Agents
- ARC (Assets Reconstruction Company) etc.
(3) Act as A Monetary Authority:
RBI implements different monetary policy such as SLR (Statutory Liquidity Ratio), CRR (Cash Reserve Ratio), Repo Rate and Reverse Repo Rate to stable the banking system. It also decides how much money is to be circulated in the market to maintain financial stability, to stabilize the exchange rates and control inflation rate in the country.
(4) Government’s Banker:
RBI is the representative of Government of India in the World Bank and IMF (International Monetary Fund). It is the financial advisor of the Government of India and helps in implementing various financial schemes of the Central as well as State Government.
(5) Foreign Exchange Management:
RBI is authorised to regulate and monitor foreign exchange in India by FEMA (Foreign Exchange Management Act). It also provides guidelines regarding the balance of payment (BOP), the balance of trade (BOT), limitations of forex reserve, gold reserve.
(6) Controls Credits and supply of money:
(7) Regulators of Payment and Settlement System:
(8) Last Resort to Bankers:
RBI is also known as the Banker’s Bank as it provides loans and accepts deposits from the banks itself at the repo rate.
(9) Appointment of CEO/Chairman of any Bank:
RBI appoints the CEO/ Chairman/ CMD of any whether it nationalised banks or private sector banks. In fact, the top authority of any scheduled banks can be appointed only from the final approval of RBI.
(10) Research and Development:
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