FUNCTIONS OF RBI
Manager of foreign Exchange and Control ->
Manages foreign exchange through 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 exchange or destroy 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.
Development Role ->
Performs a wide range of promotional function to support objectives
Related 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.
Owner and operator of the depository (SGL) and exchange (NDS) for government bonds.
Supervisory Functions ->
In addition to its traditional central functions, the Reserve bank has certain non-monetary functions of the nature of the super vision of bank and promotion of sound Banking in India.
The Reserve Bank Act, 1934, and the3 Banking Regulation Act, 1949 have given RBI wide powers of supervision and control over commercial and cooperative banks, relating to licensing and establishments, branch expansion, liquidity of their assets, management and methods of working, amalgamation, reconstruction and liquidation. Of their assets, management and methods of working, amalgamation, reconstruction and liquidation.
The RBI is authorised to carry out periodical inspections of the banks and to call for returns and necessary information from them. The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound line and to improve the methods of their operation.
Promotional Functions ->
The reserve bank no performs a variety of developmental and promotional functions. Reserve bank promote banking habits, extents banking facilities to rural and semi-urban areas, and established and promote new specialized financing agencies.
The reserve bank has helped in the setting up to the IFCI and the SCF: it set up the deposit insurance corporation of India in 1972. These institution were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilize savings, and to provide industrial finance as well as agriculture finance.
THE RBI set up the Agriculture Credit Department in 1935 to provide agriculture credit. The Bank has developed thr co-operative credit movement to encourage saving, to eliminate money-leaders from the villeges and the route its short term credit to agriculture. The RBI has set up the Agriculture Refinance and Development Corporation to provide long-term finance to farmers.