►MAIN FUNCTIONS OF RBI

Relevance: Prelims: Economy

ROLE DESCRIPTION

Monetary Authority

  • Formulates, implements and monitors the monetary policy.
  • Objective: maintaining price stability while keeping in mind the objective of growth.

Regulator and supervisor of the financial system

  • Prescribes 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 costeffective

banking services to the public.

Manager 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.

Other 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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