The Reserve Bank of India is the central bank of India. It is the regulatory organization that keeps an eye on the country’s banking sector. The Ministry of Finance owns it. It checks the supply of money and controls its issuance. It performs multiple tasks. These tasks include:
Handling foreign exchange
In this blog, we’ll delve more into the Role and Function of the Reserve Bank of India from Static GK’s perspective.
Given below are some of the most important roles that RBI Plays in the smooth running of the Indian economy:
RBI is responsible for the development and implementation of the monetary policy and makes sure that there is financial stability in India. It takes care of and uses the credit and monetary systems for its benefit.
RBI acts as an entity that protects the interests of the depositors through an efficient system of regulations. It does that by watching closely the banking operations and how they are conducted, including the solvency of a bank. It also maintains the overall financial stability via diverse policy measures or actions.
RBI also takes care of India’s foreign exchange reserves. The RBI Act of 1934 includes legal provisions governing the management or administration of foreign exchange reserves. The RBI has the liberty to invest these foreign exchange reserves as a deposit with international banks or overseas commercial banks or Instruments of debt (Bonds, Commercial paper, Certificates of deposit, Debentures, Fixed deposits, Government securities, etc.)
RBI receives and disburses funds for multiple government agencies. RBI is responsible for maintaining Central and State Governments’ Consolidated Funds, Contingency Funds, and Public Accounts. It also acts as a lender to the government by extending loans to union and federal governments. That’s why it is called the government’s banker.
RBI is also responsible for providing advice to the government related to the banks whenever it is needed. This valuable information helps in making important decisions and forming policies.
RBI also manages India’s debt with a management strategy that aims to lower borrowing costs and focuses on balancing the maturity schedule of the debt. It oversees the country’s debt management. This is done on behalf of both the federal/central and state governments. The RBI also issues new loans as part of this responsibility.
Banks open their current accounts with RBI to maintain their SLR and CRR. RBI, therefore, plays the role of a central banker for all the banks. It makes the settlement of money transfers between banks easy. When they are in need, it provides them with emergency loans and short-term credit for specific requirements.
RBI not only prints the national currency but it is also managing it completely. The bank seeks to issue an adequate supply of genuine currency notes. This ensures the smooth functioning of the Indian economy.
RBI sets up organizations to construct or improve financial infrastructure. This ensures credit to the productive sector of the economy and increases access to financial systems that are accessible.
Here are 10 more questions following the same pattern with accurate facts about the Reserve Bank of India (RBI):
Here are 10 more questions following the same pattern with accurate facts about the Reserve Bank of India (RBI):
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