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Functions of RBI

Last updated on April 6, 2024 by ClearIAS Team

RBI, also called the Monetary Authority of India, was set up on the recommendation of the Hilton Young Commission.

The statutory status of the RBI is provided under the Reserve Bank of India Act of 1934, and become operational on April 1, 1935.

Moreover, when RBI came into force it takes over the functions of Government so far being performed by the Controller of Currency and from the Imperial Bank of India.

Additionally, after India’s Partition, The RBI served as the Central Bank of Pakistan up to June 1948.

Also read: History of Banking in India

Table of Contents

Objective of RBI

RBI was nationalized in 1949 and since come under the full ambit of the Ministry of Finance, Government of India.

The purpose of the RBI is to regulate the issuance of banknotes and the maintenance of reserves in order to ensure monetary stability in India and, more generally, to operate the nation’s currency and credit system to its advantage.

The organization also aims to maintain macroeconomic stability, financial stability, and a modern monetary policy framework in order to address the challenges posed by an increasingly complex economy.

Structure of RBI

The affairs of RBI are governed by a central board of directors.

There could be a maximum of 21 members on the central board of directors including the governor and four deputy governors who are appointed by the Government of India in keeping with the RBI Act, 1934 for a period of 4 years.

Also read: Government Securities Market

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The RBI performs the following functions:

1)Monetary Management/Authority

One of the most important functions of RBI is the formulation and execution of Monetary Policy and securing monetary stability in India It functions the currency and credit system to its advantage.

2) Supervision and Regulation of Banking and Non-Banking Financial Institutions

RBI functions to protect the Interest of depositors through an effective regulatory framework. Keeping a keen eye over the conduct of banking operations and solvency of the banks along with maintaining the overall financial stability through various policy measures.

These powers of RBI come from RBI ACt 1934 and Banking Regulation Act 1949.

This regulatory and supervisory function of the RBI extends to Indian Banking System as well as Non-Banking Financial Institutions.

3) Regulation of Foreign Exchange Market, Government Securities Market, and Money Market

Foreign Exchange Market: The Foreign Exchange Management Act 1999 came into light after the liberalization measures introduced in 1991. FEMA 1991 replaced the FERA 1973 and came into effect in June 2022.

So now, the RBI is responsible to oversee the foreign exchange market in India. RBI supervises and regulates the Foreign Exchange Market through the provision of the FEMA Act 1999.

Government Securities Market:  RBI regulates the trade securities issued by the Central and State governments. For regulation of this, RBI derives its power from the RBI Act of 1934.

Money Market: Short-term and highly liquid debt securities are also regulated by RBI and for this RBI derives its powers from the RBI Act 1934.

4) Foreign Exchange Reserve Management

Foreign exchange reserve includes-

• Foreign Currency Assets (FRAs)
• Special Drawing Rights (SDRs)

RBI is the custodian of India’s foreign exchange reserves. The legal provision regarding the management of foreign exchange reserves is mentioned in RBI Act 1934.

The RBI Act of 1934 permits the RBI to invest these foreign exchange reserves in the following instruments-

• Deposit with Banks for International Settlement
• Deposit with foreign Commercial Banks
• Debt Instruments
• Other instruments with approval of the Central Banks of RBI

5) Bankers to Central and State Government

RBI acts as a banker to the government. RBI is the responsible agency for receiving and paying money on behalf of the various government departments.

RBI is also authorized to appoint other banks to act as its agent and undertake banking business on the behalf of the government.

RBI maintains Central and State Government funds like Consolidated Funds, Contingency Funds, and Public Account.

RBI also provides loans to the central/State/UT Government as a banker to the government.

Also read: Loan Loss Provisions

6) Advisor to the Government

RBI acts as an advisor to the government when called upon to do so on financial and banking-related matters.

7) Central and State Government’s Debt Manager

The debt management policy mainly aims at minimizing the cost of borrowing and smoothening the maturity structure of debt. RBI manages the public debt and also issue new loans on behalf of central and state government.

8) Banker to Banks

Banks open their current account with RBI to maintain SLR and CRR.

RBI is a common banker for the different banks that enables the settlement of interbank transfers of funds.

For special purposes or in need, RBI provides short-term loans and advances to banks

9) RBI- Lender of last resort

That means RBI comes to rescue the banks that are solvent (facing temporary liquid problems) but have not gone bankrupt. RBI provides this facility to protect the interest of depositors and to prevent the possible failure of the bank.

10) RBI- Issuer of Currency

The RBI and the government are in charge of the creation, manufacturing, and overall administration of the national currency with the aim of releasing a sufficient quantity of authentic and clean notes.

The Reserve Bank of India has given some bank branches permission to set up currency chests in order to simplify the circulation of rupee notes and coins around the nation (A currency chest is a storehouse where currency notes and rupee coins are stocked on behalf of RBI)

11) Developmental Role

RBI’s developmental role includes creating institutions to build financial infrastructure, ensuring credit to the productive sector of the economy, and expanding access to affordable financial systems.

Following are the several schemes that come under RBI’s developmental roles-

Priority Sector Lending

As per RBI, priority sectors are those sectors of the economy that may not get timely and sufficient credit in the absence of these special schemes.

Priority sector guidelines don’t provide a preferential interest rate for loans to the sector. These small-value loans typically run to those sections of the population that are weaker sections of society and needed special attention and to the section intensively employed in agriculture and small enterprises.

A list of Priority Sectors are-

• Agriculture
• Social Infrastructure
• Renewable Energy
• Weaker Sections
• Commercial Banks including foreign banks- 40% of total loan to PSL
• Regional Rural Banks- 75%
• Small Finance Banks- 75%
• Payment Bank- They do not give Credit
• Urban (primary) cooperative banks- 40% (will increase to 75% by 2024 in a phased manner)

Lead Bank Scheme

lead Bank Scheme Introduced by RBI in 1969 aims at coordinating the activities of banks and other developmental agencies with an objective to enhance the flow of bank finance to priority sectors and other sectors to promote the bank’s role in overall development.

12) Data Dissemination/Policy Research

Such research undertaken by RBI focuses on issues and problems arising at the national and international levels, having a critical impact on the Indian economy.

India is a signatory of Special Data Dissemination Standards (SDDS) as defined by IMF for the purpose of releasing data.

RBI has some legal obligations over him under RBI Act. One of them is to publish two reports every year. One is, the Annual Report, and the other is the Report on Trends and Progress of Banking in India.

RBI conducts Consumer Confidence Survey and Inflation Expectation Survey on a quarterly basis.

Key Features Related to the Functions of RBI

• RBI is authorized to issue various guidelines for bank directors and has the power to appoint additional directors to the board of a banking company.
• Prior approval of RBI is important for the appointment, reappointment, and termination of the Chairman, Managing Director, and CEO of Commercial Banks (except PSBs).
• If the situation arises then RBI with the approval of the Central Government can take the place of the Board of Directors of Commercial Banks.
• Public Sector Banks (PSBs) come under dual regulation of the Central Government and RBI so the RBI’s power regarding the PSBs is curtailed as it cannot remove the directors and management and cannot supersede the board of Banks also cannot enforce mergers.
• As per RBI’s regulation, Banks needed to maintain certain reserves in the form of CRR and SLR.
• RBI regulates the interest rate on NRI deposits, export credits (loans), and a few other categories. However, the interest rate on most of the categories of deposit and lending have been deregulated so the banks are responsible for determining such rates.
• RBI set up Deposit Insurance and Credit Guarantee Corporation (DICGC) for the protection of the interest of small depositors in case of bank failure or bankruptcy (100% subsidy). It provides insurance cover to all eligible bank depositors up to 5 lakhs per depositor per bank. To provide insurance coverage, it charges premiums from banks. DICGC covers all commercial banks including foreign bank branches as well along with UCBs/StCBs/DCCBs. But it is important to note that it does not cover deposits of foreign governments, deposits of Central and State governments, and interbank deposits.
• RBI has permitted the banks to undertake some non-traditional banking activities such as venture capital, insurance, mutual fund business, etc.
• Cooperative Banks- Cooperative Banks come under the dual regulation of RBI and the Government. Both the authorities have different fields to work on as RBI manages the banking-related functions and Central Government or State Government manages the management-related functions.
• Financial Institutions, NBFCs, Primary Dealers, and Credit Information Companies (CIC)- The four all-India financial institutions named NABARD, NHB, EXIM Bank, and SIDBI are under full-fledged regulation and supervision of RBI.
• NBFCs, Primary Dealers and CICs also come under the regulation and supervision of RBI.
• Note: RBI is authorized to regulate banks and NBFCs both but till July 2019, RBI had the power to take the place of the Board of Banks (in case of any mismanagement or default) but not of NBFCs. In July 2019 an amendment is done to the RBI Act 1934 that empowers the RBI to supersede the bank of NBFCs also in case of mismanagement or default. RBI now has the power to appoint administrators as well in the public interest.

Article Written By: Priti Raj

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March 15, 2024 at 12:24 pm

i have gained muchj information about RBI . by this i can easily understand aboutb rbi in next few classes . my bfriends are also learned much informatin of RBI .

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Function of Reserve Bank of India (RBI)

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Home » Economy » The Reserve bank of India and monetary management » Function of Reserve Bank of India (RBI)

Reserve Bank of India (RBI) is India’s Central bank. It plays a multi-facet role by executing multiple functions such as overseeing monetary policy, issuing currency, managing foreign exchange, working as a bank of government.

RBI played a vital role in ensuring economic and financial stability.

RBI’s Previous Functions

• Before inflation targeting was formally introduced in 2016, RBI was doing multiple roles.
• They were responsible for growth by managing liquidity as well as interest rates.
• They contributed in inflation management by adjusting liquidity and interest rates.
• They borrowed money on behalf of the government to keep them functioning.
• They also took care of the financial system’s stability by supervising banks and NBFCs.
• Nobel laureate Joseph Stiglitz made a statement that if RBI Governor was the governor of the US Fed then the sub-prime crisis would not have occurred.

Role of Reserve Bank of India

• The central bank issues and regulates currency notes.
• It keeps reserves with a view to securing monetary stability and is called banker to banks.
• The RBI plays a vital role in economic growth of the country and maintaining price stability.
• Monetary Policy of the Country: The RBI has been tasked to have a monetary policy framework to meet the challenges of the economy and to maintain price stability while keeping in mind the objective of growth.
• Inflation control: The RBI has targeted to keep the mid-term inflation at 4 four percent (+/- 2 percent).
• Decides benchmark interest rate: A six-member Monetary Policy Committee, headed by RBI Governor, decides the benchmark repo rate.
• Government’s banker: RBI acts as a banker for both the central as well as state governments. It sells and purchases government securities on their behalf.
• Regulator of Foreign Exchange: Foreign Exchange Management Act (“FEMA”) envisages that RBI will have a key role in management of foreign exchange.
• The central bank plays a key role in creating financial awareness among the masses.
• It also supervises if the banks and other financial institutions are doing the job assigned to them regarding financial inclusion.

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What Is the Reserve Bank of India (RBI)?

• How It Works
• Departments
• Communication

The Bottom Line

• Monetary Policy
• Federal Reserve

The Reserve Bank of India (RBI): What It Is and How It Works

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Investopedia / Michela Buttignol

The Reserve Bank of India (RBI) is the central bank of India, which began operations on Apr. 1, 1935, under the Reserve Bank of India Act. The Reserve Bank of India uses monetary policy to create financial stability in India, and it is charged with regulating the country’s currency and credit systems.

Key Takeaways

• The Reserve Bank of India (RBI) is the central bank of India,
• The RBI was originally set up as a private entity in 1935, but it was nationalized in 1949.
• The main purpose of the RBI is to conduct consolidated supervision of the financial sector in India, which is made up of commercial banks, financial institutions, and non-banking finance firms.

Understanding the Reserve Bank of India (RBI)

Located in Mumbai, the RBI serves the financial market in many ways. The bank sets the overnight interbank lending rate. The Mumbai Interbank Offer Rate (MIBOR) serves as a benchmark for interest rate–related financial instruments in India.

The main purpose of the RBI is to conduct consolidated supervision of the financial sector in India , which is made up of commercial banks, financial institutions, and non-banking finance firms. Initiatives adopted by the RBI include restructuring bank inspections, introducing off-site surveillance of banks and financial institutions, and strengthening the role of auditors

First and foremost, the RBI formulates, implements, and monitors India’s monetary policy . The bank’s management objective is to maintain price stability and ensure that credit is flowing to productive economic sectors. The RBI also manages all foreign exchange under the Foreign Exchange Management Act of 1999. This act allows the RBI to facilitate external trade and payments to promote the development and health of the foreign exchange market in India .

The RBI acts as a regulator and supervisor of the overall financial system. This injects public confidence into the national financial system, protects interest rates, and provides positive banking alternatives to the public. Finally, the RBI acts as the issuer of national currency. For India, this means that currency is either issued or destroyed depending on its fit for current circulation. This provides the Indian public with a supply of currency in the form of dependable notes and coins, a lingering issue in India.

The current Governor is Shri Shaktikanta Das, and he has four Deputy Governors that report to him directly.

Reserve Bank of India Departments

The Reserve Bank of India has a number of departments, each of which have a very specific purpose. An entire list of departments can be found on the Reserve Bank of India's site. Some of the key departments within the Reserve Bank of India along with what that department does includes but isn't limited to:

• Department of Monetary Policy: Responsible for formulating and implementing monetary policy to achieve price stability and economic growth.
• Department of Banking Regulation: Regulates and supervises banks and financial institutions to ensure the stability and efficiency of the banking system.
• Department of Currency Management: Manages the issuance and circulation of currency notes and coins.
• Department of Payment and Settlement Systems: Regulates and supervises payment and settlement systems to ensure safety, efficiency, and reliability of payment systems in the country.
• Department of Economic and Policy Research: Conducts economic research and analysis to provide inputs for policymaking and to monitor economic indicators.
• Department of Information Technology: Manages and develops IT infrastructure, systems, and applications to support the operations of the Reserve Bank of India.

Reserve Bank of India Operations

The RBI was originally set up as a private entity, but it was nationalized in 1949. The reserve bank is governed by a central board of directors appointed by the national government. The government has always appointed the RBI’s directors, and this has been the case since the bank became fully owned by the government of India as outlined by the Reserve Bank of India Act. Directors are appointed for a period of four years.

According to its website, the current focus of the RBI is to continue its increased supervision of financial institutions, while dealing with legal issues related to bank fraud and consolidated accounting and attempting to create a supervisory rating model for its banks.

Reserve Bank of India and Communication

The Reserve Bank of India acknowledges the pivotal role that communication plays in modern central banking. On its website, it emphasizes a collegial approach to monetary policy decision-making. The Reserve Bank of India's communication policy adheres to guiding principles of relevance, transparency, clarity, comprehensiveness, and timeliness with the aim of enhancing public understanding of developments across its various domains.

In its medium-term vision statement titled "Utkarsh 2022", the RBI delineates objectives including excellence in statutory functions, enhanced public trust, increased relevance nationally and globally, transparent governance, modern infrastructure, and a skilled workforce. Strategies to achieve these objectives involve consolidating past gains, leveraging emerging opportunities, and addressing future challenges through tangible, time-bound milestones.

The RBI commits to reviewing its communication policy every three years, reflecting its recognition of communication as a dynamic process crucial for effective central banking operations.

How Does the RBI Regulate Banks and Financial Institutions in India?

The RBI regulates banks and financial institutions in India through various measures such as licensing and supervision, setting capital adequacy norms, and conducting inspections and audits. The RBI is also the governing body responsible for issuing regulatory guidelines and directives.

What Are the Primary Objectives of the RBI as Outlined in the Reserve Bank of India Act of 1934?

The primary objectives of the RBI, as outlined in the Reserve Bank of India Act, 1934, include regulating the issuance of banknotes, maintaining monetary stability, operating the currency and credit system to the country's advantage, and fostering economic growth.

What Are the Key Initiatives and Strategies Outlined in the RBI's Medium-Term Vision Statement?

The RBI's medium-term vision statement outlines key initiatives and strategies aimed at achieving excellence in statutory functions, strengthening public trust, and enhancing relevance nationally and globally. It also is currently aiming to ensure transparent governance, modernize infrastructure, and foster a skilled workforce.

The Reserve Bank of India is the central banking institution in India responsible for formulating and implementing monetary policy, regulating and supervising the banking and financial system, and managing the issuance and circulation of currency. It plays a crucial role in maintaining financial stability not just for the country for the broader, global economy.

Reserve Bank of India. " Chronology of Events ."

Legislative Department of India. " The Foreign Exchange Management Act, 1999 ," Page 3.

Reserve Bank of India. " Organisation Structure ."

Reserve Bank of India. " Departments ."

Reserve Bank of India. " About Us ."

Reserve Bank of India. " Communication Policy of RBI ."

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RBI's Functions and Working

Reserve Bank of India (RBI), History, Function and Act

The RBI is the central bank of India responsible for monetary policy formulation, currency management, regulation of the financial sector, and maintaining stability in the Indian economy.

Table of Contents

Reserve Bank of India

The Reserve Bank of India (RBI) is India’s central bank and a key financial institution responsible for maintaining monetary stability and ensuring the soundness of the country’s financial system. Established in the mid-1930s, the RBI functions as the monetary authority, regulator, and supervisor of the banking sector.

Read about :  MCLR Marginal Cost of Funds Based Lending Rate

Reserve Bank of India (RBI) H istory

The Reserve Bank of India (RBI) was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, of 1934. It serves as the monetary authority, regulator, and supervisor of the financial system, controlling monetary policy, managing foreign exchanges, and overseeing payment and settlement systems. The concept of the RBI was influenced by Dr. Ambedkar’s book “The Problem of the Rupee – Its Origin and its Solution,” and its establishment was based on the recommendations of the Hilton Young Commission in 1926. The RBI plays a developmental role, acts as the issuer of currency, and serves as the banker to the Government of India.

Reserve Bank of India Timeline

Read about : Indian Financial System

Reserve Bank of India (RBI) Functions

Functions of the Reserve Bank of India (RBI) include:

• Monetary Policy: Formulating and implementing monetary policies to maintain price stability and control inflation.
• Financial System Regulation: Regulating and supervising the financial system to ensure its stability and soundness.
• Currency Issuance : Issuing and managing the currency notes and coins in circulation.
• Foreign Exchange Management: Managing and regulating foreign exchange reserves and facilitating external trade and payments.
• Developmental Role: Promoting and supporting the development of financial institutions, markets, and infrastructure.
• Payment and Settlement Systems: Overseeing and regulating payment and settlement systems to ensure efficiency and security.
• Banker to the Government: Acting as the banker and debt manager for the Government of India and state governments.
• Data and Research: Conducting economic and financial research and collecting data to facilitate informed policy decisions.
• Consumer Protection : Protecting the interests of consumers in banking and financial transactions.
• Financial Inclusion : Promoting financial inclusion and ensuring access to financial services for all segments of society.

Read about: Difference Between Organised and Unorganised Sector

RBI Act 1934

The RBI Act, of 1934 is a significant legislation that establishes the legal framework for the functioning and operations of the Reserve Bank of India (RBI). Here are some key provisions of the RBI Act, of 1934:

Read about: National Payments Corporation of India

Headquarter of RBI 

The headquarters of the Reserve Bank of India (RBI) is located in Mumbai, Maharashtra, India. The specific address of the RBI headquarters is “Central Office Building, Shahid Bhagat Singh Marg, Mumbai – 400001.” It serves as the central administrative and operational hub of the RBI, overseeing its functions and operations throughout the country.

RBI has four zonal offices: New Delhi for North, Chennai for South, Kolkata for East, and Mumbai for West along with19 regional offices and 11 sub-offices at present. The bank has two training colleges for its officers: Reserve Bank Staff College at Chennai and College of Agricultural Banking at Pune.

Also Read: Informal Economy in India

Governor of RBI 

The current Governor of the Reserve Bank of India (RBI) is Shaktikanta Das, who is the 25th person to hold this position. Prior to his role as Governor, Das served as a member of the Fifteenth Finance Commission and represented India as the Sherpa to the G20. He brings extensive experience as a retired 1980-batch Indian Administrative Service officer from the Tamil Nadu cadre. The Governor of RBI holds an important position due to the following reasons:

• Formulates and implements monetary policies.
• Regulates and supervises the banking and financial sector.
• Maintains economic stability and controls inflation.
• Manages currency issuance and reserves.
• Represents RBI nationally and internationally.
• Handles crisis management and implements risk mitigation measures.
• Communicates policies to the public, markets, and stakeholders.

Read about: List of RBI Governors of India

Reserve Bank of India UPSC 

The Reserve Bank of India (RBI) is an important topic for the UPSC (Union Public Service Commission) examination due to its relevance to various aspects of the UPSC Syllabus 2024 . Understanding the functions and roles of the RBI, its monetary policies, banking regulations, and its significance in India’s financial system is crucial for aspirants appearing for UPSC exams. Familiarity with the RBI’s history, objectives, governance structure and its impact on the Indian economy is essential for aspirants to successfully tackle questions related to banking, finance and economic policies in the UPSC examination. Aspirants can benefit from UPSC Online Coaching and UPSC Mock Test to get an insight into such topics.

Read about :  Payment banks

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Reserve Bank of India FAQs

What is rbi used for.

RBI is used for regulating the monetary policy, controlling inflation, maintaining financial stability, and managing currency issuance in India.

What is current CRR and SLR rate?

The current CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) rates are subject to change and can be obtained from the Reserve Bank of India's official website or reliable sources.

Who owns RBI bank?

The Reserve Bank of India (RBI) is owned by the Government of India.

Why is RBI a government bank?

RBI is a government bank because it is established under the Reserve Bank of India Act, 1934, and is responsible for implementing government policies, managing currency, and regulating the banking and financial system in the country.

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Reserve Bank of India [UPSC Notes for Indian Economy]

The Reserve Bank of India (RBI) is India’s central bank. It controls the monetary policy concerning the national currency, the Indian rupee. The basic functions of RBI are the issuance of currency, sustaining monetary stability in India, operating the currency, and maintaining the country’s credit system. In this article, you can read all about the Reserve Bank of India, its origins, the role of RBI, its functions, mandate and all the latest updates related to the RBI, relevant for the IAS exam Indian economy segment.

Reserve Bank of India Download PDF Here

In May 2023, the Reserve Bank approved a Rs 87,416 crore dividend payout to the central government for 2022-23, nearly triple what it paid in the previous year.

• The decision was taken at the 602nd meeting of the Central Board of Directors of the Reserve Bank of India held under the chairmanship of Governor Shaktikanta Das.
• The board approved the transfer of Rs 87,416 crore as surplus to the central government for the accounting year 2022-23.
• This is a 188% jump from the last year’s (2021-22) surplus transfer of Rs 30,307 crore.
• It decided to keep the Contingency Risk Buffer (CRB) at 6 per cent.
• The contingency risk buffer is a specific provision fund kept by the central bank primarily to be used during any unexpected and unforeseen contingencies.
• The Bimal Jalan Committee recommended that the CRB needs to be maintained at a range of 5.5% to 6.5% of the RBI’s balance sheet.
• The board also reviewed the global and domestic economic situation and associated challenges, including the impact of current global geopolitical developments.
• The dividend could bring in additional revenue of around 0.2 per cent of GDP.

Provisions Regarding Transfer of Surplus by RBI:

• The Reserve Bank of India Act of 1934 mandates that profits made by the central bank from its operations be sent to the Central Government.
• As the manager of its finances, every year the RBI also pays a dividend to the government to help with the finances from its surplus or profit.
• A technical Committee of the Reserve Bank of India headed by Y H Malegam (2013), which reviewed the adequacy of reserves and surplus distribution policy, recommended a higher transfer to the government.

How Does RBI Make Profits?

• The RBI is a “full-service” central bank.
• It is mandated to keep inflation in check and also manage the borrowings of the Government of India and of state governments.
• It also supervises or regulates banks and non-banking finance companies and manages the currency and payment systems.  While carrying out these functions, RBI makes profits.
• RBI claims a management commission on handling the borrowings of state governments and the central government.
• RBI also earns interest on its holdings of local rupee-denominated government bonds or securities, and while lending to banks for very short tenures, such as overnight.
• RBI’s income comes from the returns it earns on its foreign currency assets, which could be in the form of bonds and treasury bills of other central banks or top-rated securities, and deposits with other central banks.

Reserve Bank of India has dismissed worries about the “exposure” of Indian banks to the Gautam Adani-led conglomerate. Click here to read more about the Adani-Hindenburg issue .

What is Final Exposure?

• A bank’s counterparty exposures may cause its assets to become concentrated in the hands of a single or network of connected counterparties.

About Large Exposure Framework (LEF) Guidelines:

• The Basel Committee on Banking Supervision (BCBS) released supervisory recommendations on significant exposures in January 1991, titled Monitoring and Managing Significant Credit Exposures. Know more about Basel III Norms in the link.
• The recommendations on large exposures (LE) for banks were created by the RBI after deciding that Indian banks should properly embrace these standards.
• With rare exclusions, the LEF applies to a bank’s exposure to all of its counterparties as well as groups of connected counterparties.
• It is founded on the 2014 Basel guidelines.
• Positive indications include numerous measures of sufficient capital, excellent assets, liquidity, provision coverage, and profitability.

Update on Feb 2021

• On 16th February 2021, RBI announced an expert committee on primary urban cooperative banks. The chairman of the committee is NS Vishwanathan. (Get the list of committees with their purpose in the linked article for quick revision for UPSC.)
• On 5th February 2021, RBI Monetary Policy (2021-22) was announced. The central bank kept the Repo Rate at 4 percent while projected the GDP growth in Fiscal Year (FY) 2022 at 10.5 percent. (Understand Cash Reserve Ration, Repo Rate and Reserve Repo Rate in the linked article.)

What is RBI?

RBI is an institution of national importance and the pillar of the surging Indian economy. It is a member of the International Monetary Fund (IMF) . 

• The concept of the Reserve Bank of India was based on the strategies formulated by Dr. Ambedkar in his book named “The Problem of the Rupee – Its Origin and Its Solution”.
• This central banking institution was established based on the suggestions of the “Royal Commission on Indian Currency & Finance” in 1926. This commission was also known as the Hilton Young Commission.
• In 1949, the Reserve Bank of India was nationalized and became a member bank of the Asian Clearing Union.
• RBI regulates the credit and currency system in India.
• The chief objectives of the RBI are to sustain the confidence of the public in the system, protect the interests of the depositors, and offer cost-effective banking services like cooperative banking and commercial banking to the people.

Reserve Bank of India (RBI) – Timeline

The RBI is an important tool in the development strategy of the Indian government. UPSC has asked several questions regarding RBI functions, objectives, monetary regulations, etc., especially in UPSC Prelims . One of the things to know about RBI is its timeline which is provided in the table below:

In the year 2016, the original RBI Act of 1934 was amended and that provided the statutory basis for the implementation of the flexible inflation-targeting framework. 

The Preamble of Reserve Bank of India

Another thing to know about RBI is its Preamble. It describes the basic functions of the Reserve Bank as:

“… to regulate the issue of Bank Notes and keeping of reserves to secure monetary stability in India and generally to operate the currency and credit system of the country to its advantage.”

Functions of Reserve Bank of India

In this section, we discuss the functions of RBI in detail.

The Reserve Bank of India works as:

Monetary Authority

• Implementation of monetary policies.
• Monitoring the monetary policies
• Ensuring price stability in the country considering the economic growth of the country

Also, read about the Monetary Policy Committee (MPC) and know more about this six-member committee.

Regulator and Administrator of the Financial System

• The RBI determines the comprehensive parameters of banking operations.
• License issuing
• Liquidity of assets
• Bank mergers
• Branch expansion, etc.

Managing Foreign Exchange

• RBI manages the FOREX Reserves of India.
• It is responsible for maintaining the value of the Rupee outside the country. 
• It aids foreign trade payments. 

Issuer of currency

• The Reserve Bank of India is responsible for providing the public with a sufficient supply of currency notes and coins. 
• The quality of currency notes and coins is also taken care of by the RBI.
• RBI is in charge of issuing and exchanging of currency and coins. 
• Also, the destruction of currency and coins that are not fit for circulation.

RBI’s Developmental Role

• Promotional functions that support national objectives are organized by RBI that encourage rural and agricultural economic development.
• The RBI will regularly issue directives to commercial banks to lend loans to small-scale industrial units. 

Composition of RBI

• The Reserve Bank of India is controlled by a central board of directors. The directors are appointed for a 4-year term by the Government of India in keeping with the Reserve Bank of India Act.
• 4 Deputy Governors
• 2 Finance Ministry representatives
• 4 directors to represent local boards headquartered in Mumbai, Kolkata, Chennai, and New Delhi
• The executive head of RBI is the Governor.
• The Governor is accompanied by 4 deputy governors.
• The First Governor of RBI was Sir Osborne Smith and the First Indian Governor of RBI was C D Deshmukh.
• The First woman Deputy Governor of RBI was K J Udeshi.
• The only Prime Minister who had been the Governor of RBI was Manmohan Singh.

The current governor of RBI is Shaktikanta Das. Get the list of RBI Governors in the linked article.

Zonal Offices

• RBI has four zonal offices: New Delhi for North, Chennai for South, Kolkata for East, and Mumbai for West.
• The Reserve Bank of India has 19 regional offices and 11 sub-offices at present.
• Reserve Bank Staff College at Chennai
• College of Agricultural Banking at Pune.

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• role and function of rbi

Role And Function Of RBI In Indian Economy PDF: Complete Details

Apr 17 2024

Role And Function Of RBI In the Indian Economy: The Reserve Bank of India (RBI), the nation's Central Bank, is in charge of governing and overseeing the operation of the Indian Banking System. The Monetary Authority of India, or RBI, was established on the Hilton Young Commission's advice. The Reserve Bank of India Act of 1934 established the RBI's legal position, and it went into operation on April 1st, 1935. Additionally, when the RBI was established, it took over the government's duties previously carried out by the Controller of Currency and the Imperial Bank of India. The RBI furthermore served as the Central Bank of Pakistan from June 1948 till India's Partition. The Reserve Bank of India's activities and responsibilities are significant for preserving India's economy. A few of its responsibilities include controlling banknote production, ensuring financial stability, and managing the nation's currency and credit system. Aspirants in search of the role and function of RBI PDF, role and function of RBI in the Indian Economy, Role and functions of Reserve Bank of India, and functions of RBI in banking can refer to this article for complete details.

Check List Of RBI Governors Of India

Banking Awareness Free PDFs

What are the Objectives Of RBI?

As the foundation of the nation's financial system, the RBI has a number of goals, which are outlined in its preamble. Following is a list of some of them:

• To regulate the issue of Bank notes.
• Keeping reserves with a view to securing monetary stability in India and generally operating the currency and credit system of the country to its advantage.
• To have a modern monetary policy framework to meet the challenge of an increasingly complex economy.
• To maintain price stability while keeping in mind the objective of growth.

What Are The Fundamental Objectives Of RBI?

The fundamental objectives of the Reserve Bank of India are given below.

• Bank of all the other Commercial banks.
• Only the authority who has a note-issuing power.
• Bank to the Government of India.

What is the Structure Of RBI?

The central board of directors may have up to 21 members, including the governor and four deputy governors who are chosen by the government of India under the RBI Act, 1934 for a term of four years.

Constitution:

Official Directors

Full-time: Governor and not more than four Deputy Governors.

Non Official Directors

Nominated by the Government: Ten Directors from various fields and two government Officials.

Others: four Directors - one each from four local boards.

Role And Function Of RBI PDF

The roles and functions of RBI are curated in the form of a PDF for the reference of the candidates willing to know more about the Reserve Bank of India and its functions. Downloading the Role And Function Of RBI PDF helps you to remember the concepts easily about the Central Bank of India. The main objectives, structure of the Reserve Bank of India, main roles and functions of RBI, etc., are included in this Role And Function Of RBI PDF given below.

Role And Function Of RBI PDF Download

What are The Main Roles and Functions Of RBI?

The important roles and functions of the Reserve Bank of India are given below.

1. Monetary Authority/Management

One of the most important duties of the RBI is to design and implement monetary policy as well as to guarantee monetary stability in India. It uses the financial and credit systems to its advantage.

2. Supervision Of Financial System

Through a strong regulatory system, the RBI serves to protect the interests of depositors. maintaining thorough oversight of the bank's operations and its solvency, as well as ensuring overall financial stability through several policy decisions.

3. Regulation of Foreign Exchange Market, Government Securities Market, and Money Market

The Indian foreign exchange market is governed by the RBI. The FEMA Act of 1999's provisions are how RBI oversees and manages the foreign exchange market.

The RBI oversees the trading of securities by the federal and state governments. It has the jurisdiction to control this thanks to the RBI Act of 1934.

According to the wording of the RBI Act of 1934, the RBI has the power to regulate short-term and highly liquid debt securities.

4.  Foreign Exchange Reserve Management

The responsibility for managing India's foreign exchange reserves lies on the RBI. The management of foreign exchange reserves is governed by the RBI Act of 1934's legislative regulations. According to the RBI Act of 1934, the RBI is permitted to invest these foreign exchange reserves in the following instruments. They are,  Deposit money with foreign banks,  Deposit with one of the commercial banks abroad, and Debt instruments.

Bank Rate - Complete Details

5.  Bankers to the Central and State Governments

RBI serves as the government's banker. The RBI is in charge of receiving and disbursing funds on behalf of various government agencies. Additionally, RBI is permitted to appoint additional banks to serve as its agents and conduct banking operations on the government's behalf.  The Central and State Governments' Consolidated Funds, Contingency Funds, and Public Accounts are all maintained by the RBI.  As a lender to the government, RBI also extends loans to the federal, state, and territorial governments.

6. Government's Advisor

When  asked  to  advise  the  government  on  financial  and  banking-related  issues,  RBI  does  so.

7. Debt Manager Of Central And State Governments

The primary goals of the debt management strategy are to reduce borrowing costs and even out the debt's maturity structure. On behalf of the federal government and state governments, RBI manages the nation's debt and issues fresh loans.

8. Banker To Banks

To maintain their SLR and CRR, banks open current accounts with the RBI. The RBI serves as a central banker for all of the individual banks and facilitates the settlement of money transfers between banks.  RBI makes short-term loans and advances to banks for specific uses or in need.

9. Issuer Of Currency

To provide an adequate number of genuine and clean notes, the government and the RBI are in charge of the design, production, and overall administration of the national currency. To facilitate the movement of rupee notes and coins around the country, the Reserve Bank of India has granted permission to some bank branches to establish currency chests. (A currency chest is a storage where currency notes and rupee coins are kept on behalf of the RBI).

10. Developmental Role

The RBI's involvement in economic growth involves setting up organizations to construct financial infrastructure, ensuring credit to the economy's productive sector, and increasing access to accessible financial systems.

Important Features Of The Role And Functions Of RBI

• The RBI has the authority to appoint extra directors to the board of banking business as well as to establish a variety of guidelines for bank directors.
• The appointment, reappointment, and termination of the chairman, managing director, and chief executive officer of commercial banks (apart from PSBs) all require the prior consent of the RBI.
• If the need arises, the RBI may, with the consent of the Central Government, replace the Commercial Banks Board of Directors.
• Since the Central Government and RBI jointly regulate Public Sector Banks (PSBs), the RBI's authority over PSBs is constrained because it is unable to appoint new directors and managers, override the authority of the banks' boards of directors, or compel mergers.
• Banks were required to have specific reserves in the form of CRR and SLR by RBI regulations.
• The interest rate on NRI deposits, export credits (loans), and a few other types of loans is governed by the RBI. The majority of deposit and loan categories have, however, had their interest rates deregulated, thus it is now up to the banks to set these rates.
• For the protection of small depositors' interests in the event of bank collapse or bankruptcy (100 percent subsidy), the RBI established the Deposit Insurance and Credit Guarantee Corporation (DICGC). All qualifying bank depositors are covered by insurance up to Rs. 5 lakhs per depositor per bank. It collects premiums from banks to offer insurance coverage. All commercial banks, including foreign bank branches and UCBs/StCBs/DCCBs, are covered by the DICGC. It's crucial to remember that it excludes interbank deposits, deposits made by foreign governments, and deposits made by central and state governments.
• The RBI has permitted banks to engage in a variety of non-traditional banking operations, including the operation of mutual funds, insurance, and venture capital.

FAQs - Role And Function Of RBI In Indian Economy

Q. What are the fundamental objectives of RBI?

The fundamental objectives of the Reserve Bank of India are the b ank of all the other Commercial banks, only the authority that has a note-issuing power, and the bank to the Government of India.

 Q. What is the role of RBI in monetary management?

Q. What is the role of RBI in foreign exchange reserve management?

The responsibility for managing India's foreign exchange reserves lies on the RBI. The management of foreign exchange reserves is governed by the RBI Act of 1934's legislative regulations. According to the RBI Act of 1934, the RBI is permitted to invest these foreign exchange reserves in the following instruments. They are, Deposit money with foreign banks, Deposit with one of the commercial banks abroad, and Debt instruments.

Q. What is the role of RBI in the supervision of the financial system?

Q. What are the roles and functions of RBI in the Indian Economy?

The roles and functions of RBI in the Indian economy are to regulate the issue of Bank notes, keep reserves to secure monetary stability in India, and generally operate the currency and credit system of the country to its advantage, to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth.

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Role of RBI in the Indian Economy – Functions, Roles & More!

by FinGrad Academy | Jul 25, 2022 | Investing , Stock Market Basics | 0 comments

Role of RBI in the Indian Economy: Since its inception, the Bank of India (RBI) has been the nation’s sole player in economic development and monetary stability. Today we will examine the roles, functions, and contributions of the Reserve Bank of India (RBI) to the Indian economy. Keep Reading to find out!

Table of Contents

How Did RBI Come to Be?

The Bank of India (RBI) was the bank for private stockholders, and the Reserve Bank (Transfer of Public Ownership) Act of 1949 led to its nationalization. The Reserve Bank of India is a legal entity with sufficient certainty, a unitary state, and the ability to sue or be prosecuted through its name.

Functions of Reserve Bank of India

As India’s central bank, the Reserve Bank of India (RBI) performs various tasks, including regulating monetary policy, issuing currency, overseeing foreign exchange, and serving as the Indian government’s bank.

Thus, the Role of RBI in the Indian Economy in ensuring economic and monetary stability. We examine the RBI’s previous involvement in the Indian economy and its current position below. 

RBI’s Previous Functions

• Before the formal establishment of inflation targets in 2016, the RBI served in various capacities.

• Liquidity and interest rates are supervised to keep growth under control.

• They helped regulate inflation by changing liquidity and interest rates.

• They borrowed money on behalf of the government to keep them running. And they also ensured the stability of the financial system by overseeing banks and NBFCs. Nobel Laureate Joseph Stiglitz stated that the sub-prime crisis wouldn’t have occurred if RBI Governor had been the U.S. Fed Governor !

Current Role of Reserve Bank of India

1. country’s monetary regulatory.

 The RBI was already dedicated to building a monetary policy basis for explaining the country’s economic issues and maintaining low and stable inflation while pursuing the goal of growth.

2. Inflation control

The Reserve Bank of India (RBI) aims to limit mid-term inflation to 4% (+/- 2%). It also supervises if the banks and other financial institutions are doing their job regarding financial inclusion. The bank sets the key interest rate: The standard repo rate is set by a 6 Federal Reserve Board led by the RBI President.

3. Foreign Currency exchange Regulator 

The U.S. Foreign Corrupt Practices Act (“FEMA”) envisions RBI playing a vital role in foreign currency regulation. The government banks play a critical role in raising financial literacy among the general public, and it also monitors whether financial firms are carrying out their responsibilities in terms of financial inclusion.

4. Banker to Government

In India, only the Bank of India (RBI) has the authority to issue treasury bills. A separate agency called this same issue debt is in charge of issuing bank notes. On the proposal of the National Board, the Central Government dictates the size of bank notes, as well as the discontinuation of banknotes. The RBI serves as a lender to the state and federal governments. In its service, it distributes and buys government bonds.

5. Creates bank policies

The Bank of India (RBI) has the authority to award licenses to begin banking operations in India and the authority to revoke a duty of disclosure to a banking corporation. The authenticity of article 23 of the Companies Bill, 1949, was challenged in a case brought under Section 167.

6. Banker’s bank

The RBI controls, restrict, and constrains foreign exchange trading. It grants banks or financial institutions permission to function as government agencies in the Forex market. It established the “Depositor Information and Awareness Scheme.”

It’s the bankers to banks because it issues and manages currency notes and holds reserves to ensure macroeconomic stability. So, the vital role of the RBI is critical to the country’s economic growth and pricing stability.

7. Objectives of the monetary policy

The term “monetary policy” refers to procedures used to control the amount of money in circulation in a given economy. See below, there are two kinds of monetary policy instruments, and the monetary authority uses the instruments to achieve predetermined goals.

Quantitative or General Tools

1. bank rate policy (brp).

The Bank Rate Policy (BRP) is a very important technique used in monetary policy to influence the volume or the quantity of credit. The efficiency of the bank rate as a monetary policy tool depends on the existing banking network, interest elasticity of investment demand, and the strength of the money market.

2. Open Market Operation (OMO)

The open market operation refers to the purchase and sale of short-term and long-term securities by the RBI in the open market. The OMO is used to wipe out the shortage of money in the money market, influence the interest rate structure, stabilize the market for government securities, etc.

3. Variation in the Reserve Ratios (VRR)

Commercial Banks have to keep a certain proportion of their total assets in Cash Reserves with the Reserve Bank of India (RBI). These reserve ratios are Cash Reserve Ratio (CRR) and a Statutory Liquidity Ratio (SLR). Any change in the VRR changes commercial banks’ reserves positions.

Qualitative Instruments or Selective Tools 

The qualitative instruments are also known as the Selective Tools of monetary y policy. These tools are for discriminating between different uses of credit, and they can be discrimination favoring export over import or essential over non-essential credit supply. This method can influence the lender and borrower of the credit.

1. Fixing Margin Requirements

The margin refers to the proportion of a loan that a borrower has to raise to get finance for his purpose. A change in a margin implies a change in the loan size. 

2. Consumer Credit Regulation 

This method encourages credit supply for the needy sector and discourages it for other non-necessary sectors. 

3. Publicity 

Central banks can issue directives, guidelines, and suggestions for commercial banks regarding reducing credit supply for speculative purposes. 

4. Credit Rationing 

Directives guide commercial l banks in framing their lending policy. 

5. Moral Suasion 

The central bank can penalize banks by changing some rates or even putting a ban on a bank. And can restrain commercial banks by reducing credit supply for speculative purposes.

6. Control via Directives 

Under this technique, it issues constant directives to all commercial institutions. These directives guide commercial banks in framing their lending policy.

RBI was established to foster the banking business and not impede such business growth. The RBI’s monetary policy deals with almost all other vital topics such as financial stability, financial markets, interest rates, credit delivery, regulatory norms, financial inclusion, and institutional developments.

The Reserve Bank of India (RBI) is India’s Central bank. Role of RBI in the Indian Economy in overseeing monetary policy, issuing currency, managing foreign exchange, and working as a government bank.

The central bank also has a key role in creating financial awareness. How about beginning your online stock market journey with  FinGrad ? With a host of top experts in the industry, your journey can be all the easier.

That’s all for the article on Role of RBI in the Indian Economy, we hope you enjoyed it. Happy investing!

Tags: Conclusion For role of RBI in Indian economy, Developmental role of RBI, Does RBI regulates foreign exchange?, Role of RBI in Indian economy Class 10, Role of RBI in Indian economy PDF, Role of RBI in Indian economy ppt, Role of RBI in Indian economy Wikipedia, What are the 3 main functions of RBI?, What are the five main functions of RBI?, What is meant by RBI?, What is RBI role in banking?, What is the role of RBI in economic development?, Role of RBI in the Indian Economy, What is the role of RBI in Indian economy Class 10?, What role does Reserve Bank play in the economy?, Who is Authorised by RBI to deal in foreign exchange? What is the role of RBI in foreign exchange market?, Who regulates foreign currency exchange?

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The Role of RBI in shaping the Indian Economy | RBI Day Special

The Reserve Bank of India (RBI) has played a crucial role in shaping the Indian economy since its inception in 1935. From managing the monetary policy to regulating the financial sector, the RBI has been instrumental in laying the foundation for India’s economic growth. In fact, India’s GDP has grown from just $30.6 billion in 1950 to over $3.4 trillion in 2022, and the RBI has been a key driver of this transformation. As we celebrate RBI Foundation Day today, it’s worth reflecting on the institution’s contributions to India’s economic journey and how it continues to shape the country’s future.

RBI’s 9 Key Contributions to Indian Economic Development

As we look back on the rich legacy of the Reserve Bank of India, it’s clear that the institution has played a crucial role in shaping the Indian economy and laying the foundations for a self-reliant nation. Let’s delve into RBI’s 9 key contributions that have left an indelible mark on the Indian economic landscape.

1. Nationalization of Banks – 1969

Nationalization of banks was implemented under the Banking Companies (Acquisition and Transfer of Undertakings) Act of 1970. The ordinance came into force on 19 July 1969, “to better serve the needs of development of the economy in conformity with national policy objectives.”

This move was aimed at aligning the banking system with the needs of economic policy and achieving a more equitable distribution of resources, especially in the context of development, where banks played a significant role. With the nationalization of 14 major banks by the government under the guidance of the RBI, the banking sector was given a significant boost towards achieving a more equitable distribution of resources and increasing financial inclusion.

2. Priority Sector Lending – 1972

The roots of priority sector lending can be traced back to 1966 when Morarji Desai recognized the need for increased credit to agriculture and small industries. However, it wasn’t until a RBI report in the National Credit Council in 1972 that the definition for priority sector was formalized. In 1974, commercial banks were given a target of 33.33% of their ANBC, which was later increased to 40% on the recommendations of Dr. K.S. Krishnaswamy committee. The introduction of priority sector lending also allowed the government to address important political lobbies after the nationalization of banks. Over time, the definition of priority sector lending has grown to cover important neglected sectors of the economy, with a focus on agriculture and small industries, which includes micro, small, and medium enterprises (MSME).

3. Liberalization of the Indian Economy – 1991

In 1991, India faced a balance of payment crisis due to the increasing pressure on foreign reserves. The government of India initiated a series of economic reforms aimed at liberalizing and opening up the Indian economy. 

RBI played a significant role in implementing these reforms, which included abolition of License Raj, reduction of import duties, liberalization of industrial licensing, and allowing foreign direct investment (FDI) in many sectors. As a result of these reforms , India’s international competitiveness increased in various sectors like auto components, telecommunications, software, pharmaceuticals, biotechnology, research and development, and professional services. Foreign investment in the country rose from US$132 million in 1991–92 to $5.3 billion in 1995–96. Poverty rates also decreased from 36% in 1993-94 to 26.1% in 1999-00.

Overall, these reforms helped India shift from a protectionist and regulated economy to a market-oriented one, leading to increased economic growth, job creation, and a rise in living standards.

4. TReDS – 2014

In order to address the issues of delayed payments and working capital inefficiencies faced by Micro, Small, and Medium Enterprises (MSMEs), the Reserve Bank of India (RBI) introduced Trade Receivables Discounting System (TReDS) in 2014. TReDS is an electronic platform where MSMEs can sell their trade receivables at a competitive rate to financiers, including banks and non-banking financial companies (NBFCs), through an auction mechanism. 

As per RBI data , the number of invoices uploaded and financed through the TReDS has more than doubled in the financial year 2021-22 and the success rate has improved to 94.7 per cent from 91.3 per cent a year earlier. This indicates a growing acceptance of TReDS among MSMEs and financial institutions, which is expected to further improve cash flows and financing opportunities for MSMEs in the future.

5. Unified Payment Interface (UPI) – 2016

The Unified Payment Interface (UPI) was launched by the National Payments Corporation of India (NPCI) in 2016 under the guidance of the Reserve Bank of India (RBI). The RBI played a significant role in conceptualizing and developing the UPI platform, which aimed to provide a seamless and instant payment experience to users across India.

Since its launch, UPI has gained massive popularity among consumers and businesses alike, with the volume of UPI transactions increasing manifold from 0.45 crore in January 2017 to 804 crore in January 2023. The value of UPI transactions has also increased from just Rs 1,700 crore to Rs 12.98 lakh crore during the same period. These figures demonstrate the enormous impact that UPI has had on driving digital payments adoption in India, promoting financial inclusion, and reducing the dependency on cash transactions.

6. Bharat Bill Payment System (BBPS) – 2019

Bharat Bill Payment System (BBPS) was launched in 2019 by the National Payments Corporation of India (NPCI) under the guidance of the Reserve Bank of India (RBI). It is an integrated bill payment system that offers interoperable and accessible bill payment services to customers through a network of agents or online channels. BBPS provides a one-stop solution for payment of various bills such as electricity, gas, water, DTH, mobile postpaid, broadband, landline, municipal taxes, and more. 

The introduction of BBPS has helped in increasing the adoption of digital payments and has contributed towards the government’s goal of creating a less-cash economy. From April to November of FY23, BBPS processed ₹1.22-lakh crore or 689.63 million (in volume) transactions. Compared to FY18’s load of ₹9,099.3 crore (73.39 million) transactions, this is an exponential leap.

7. Aadhar-based eKYC – 2019

In 2019, the Reserve Bank of India (RBI) approved new Aadhaar eKYC norms, paving the way for digital verification of identity and address. The Aadhaar eKYC process enables financial institutions to authenticate customers’ identities remotely, without the need for physical documentation.

Since its introduction, Aadhaar eKYC has significantly streamlined the customer onboarding process for banks, insurance companies, and other financial institutions. In the third quarter of the financial year 2022-23, Aadhaar eKYC transactions jumped 18.53% to 84.8 crore, indicating the increasing adoption and popularity of the digital identity verification method.

In another move to promote digitization, the RBI also allowed non-banking financial companies (NBFCs) to apply for Aadhaar eKYC authentication licenses, enabling them to perform online customer verifications. This decision is expected to boost the use of Aadhaar eKYC and further reduce the need for physical documentation, making financial transactions more seamless and efficient.

8. Emergency Credit Line Guarantee Scheme (ECLGS) – 2020

The Emergency Credit Line Guarantee Scheme (ECLGS) was launched by the Government of India in May 2020 to provide immediate credit assistance to small and medium enterprises (SMEs) affected by the COVID-19 pandemic. The Reserve Bank of India (RBI) played a crucial role in the implementation of the scheme by providing necessary guidelines and regulatory support to banks and financial institutions.

The scheme has been successful in providing much-needed liquidity support to SMEs, as the credit to MSMEs by scheduled commercial banks in the past eight years has grown by 71 per cent from Rs. 11.71 lakh crore deployed during the financial year 2014-15 to Rs. 20.11 lakh crore during the financial year 2021-22. This has helped to mitigate the financial stress faced by SMEs due to the COVID-19 pandemic and support the overall economic recovery.

9. Account Aggregator (AA) – 2021

The Reserve Bank of India (RBI) launched the Account Aggregator (AA) framework in September 2021 to enable easier sharing of financial data across multiple financial institutions. The framework allows customers to manage their financial data from various financial entities in a secure and seamless manner through a consent-based mechanism.

A year after its official release, India’s Account Aggregator ecosystem boasts of 1.1 billion AA-enabled accounts and has already seen 2.05 million users voluntarily share their financial data with banks and financial institutions to avail loans, etc. The launch of the Account Aggregator framework is expected to revolutionize the way individuals and small businesses manage their finances, making it easier and more convenient for them to access a range of financial services. 

The RBI’s Legacy: A Story of Resilience, Innovation, and Progress

Over the past 88 years, the RBI has played a pivotal role in shaping India’s economy, and its contributions have been nothing short of remarkable. From introducing innovative policies to navigating through uncertain times, the RBI has always risen to the occasion and has served as the guardian of India’s economic well-being. We can only imagine what the future will bring, but we can be sure that the RBI will continue to be at the forefront of India’s growth story.

• The Reserve Bank of India

The Reserve Bank of India is the Central Bank of India, which means it is at the apex of the banking structure of the economy . It is one of the main governing body and regulatory body in India and helps the government in its role as a business facilitator. Let us learn a bit more about the RBI.

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The RBI was first established on the 1 st of April 1935 and nationalized in 1949. The governing of the RBI is done in accord to the RBI Act by the government. Its day to day affairs are take care of the Board of Directors who are chosen by the government .

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• Government as a Business Facilitator
• Competition Commision of India (CCI)

Functions of the RBI

• The issuer of Currency: The RBI is the only authorized body that can issue currency in the country. So they print, distribute and regulate the flow of currency in the economy.
• Banker to the Government: Even the Central and State government need basic banking functions. The RBI provides them with these facilities like depositing monies, remittances etc. It can also make advances and provide loans to the government whenever necessary.
• Banker to other Banks: The Reserve Bank of India also supervises all other commercial banks in the country. It provides financial assistance to these banks like short-term loans and advances. The RBI also will dictate interest rates and the CRR limits to the commercial banks.
• Regulator of Foreign Exchange: It is the function of the RBI to maintain the value of the rupee in the global economy. It does so by acting as the custodian of foreign exchange reserves in the country. It maintains enough reserves to battle against fluctuations.
• Controls Credit in the Economy: This can be said to be the primary function of the Reserve Bank of India, the control of credit and money in the market . It uses qualitative and quantitative methods to either expand or contract the available credit in the economy according to circumstances.

RBI’s Role in Business Facilitation

As we know the government plays a huge role in facilitating and promoting business and trade in the economy. It does so through its various business organizations. The RBI plays a major role in this function. Let us see how the RBI helps facilitate business and growth in the economy.

Currency Policy

If you remember from the recent demonetization event, the RBI played a major role in that. This is because the RBI is responsible for the monetization of the economy, i.e. the currency policy.

The entire economy depends on the availability of money in the market. So the money supply is also critical to the functioning and success of businesses. And businesses also require foreign currency for international trade.

The RBI is also responsible for the foreign exchange mechanism of the economy. So the RBI plays a very direct role in the government’s facilitation of business in the economy.

Credit Policy

Funding and loans are a very important aspect of businesses. The RBI does not provide any financing to the businesses directly. However, it does control the credit available in the market through the banks and any other lending institutions.

By using quantitative methods like the SLR and the CRR ratios it can increase or decrease the funds available with the banks . This will, in turn, decide how much loans the banks can provide to its customers. The most direct measure is the bank rates, or what we call the basis points scheme.

The RBI can also use qualitative measures to increase or decrease credit availability in the economy. Say, for example, it feels the steel industry needs more loans to advance. Then it can relax the norms for such an industry and instruct the banks to make such loans available. There is also the Priority Lending Sector as decided by the RBI.

Solved Question on Reserve Bank of India

Q: _____ basis points is one percent .

Ans: The correct option is C. One percent change in the rate of interest corresponds to 100 basis points.

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Organizations Facilitating Business

• Introduction to Government as a Business Facilitator
• Industrial Finance Corporation of India (IFCI)
• Securities and Exchange Board of India (SEBI)
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• Insurance Regulatory and Development Authority of India (IRDAI)
• Small Industries Development Bank of India (SIDBI)
• Export and Import Bank of India (EXIM)
• National Bank for Agriculture and Rural Development (NABARD)

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Role of RBI

Module Units

• 1. Introduction
• 2. Role of RBI: Functions & Objectives
• 3. Inflation
• 4. Steady Growth
• 5. Financial Stability
• 6. Monetary Policy
• 7. Fiscal Policies
• 8. Union Budget
• 9. Revenue Receipts
• 10. Capital Receipts
• 11. Revenue Expenditure
• 12. Capital Expenditure
• 13. Conclusion

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So, you see, the role of RBI is not limited to its monetary policy. It has a much bigger role to play in our economy. Yes, of course, being the central bank of our country, its main objective is to control the money supply in the economy and keep inflation at a healthy range so that the economy can grow to its full potential. RBI is the banker to the Government of India. It manages the revenue and expenditure of the government so that it can focus on the social welfare and economic prosperity of the country. We hope you have enjoyed learning with us. There are more such interesting modules on ELM School. Do check them out as well!

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Padres pregame: Seeking a series sweep in Milwaukee

Padres have won three games in a row and each of their last three series

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Jake Cronenworth remains out of the lineup as the Padres turn to Matthew Batten to play first base as they seek a series sweep in Milwaukee.

First pitch is at 10:10 a.m.

<blockquote class=”twitter-tweet”><p lang=”en” dir=”ltr”>Good morning from Milwaukee 👋 <a href=” https://t.co/QrHvHZhMIu “>pic.twitter.com/QrHvHZhMIu</a></p>&mdash; San Diego Padres (@Padres) <a href=”

Good morning from Milwaukee 👋 pic.twitter.com/QrHvHZhMIu — San Diego Padres (@Padres) April 17, 2024

“>April 17, 2024</a></blockquote> <script async src=” https://platform.twitter.com/widgets.js ” charset=”utf-8”></script>

The Padres (11-9) have already clinched the series and have won their last three games, their longest winning streak since closing the 2023 season with five straight wins. They begin the day one game behind the Dodgers (12-8) in the NL West.

Cronenworth is considered day-to-day after exiting Monday’s game with soreness in his right leg: “Not necessarily in the calf; it kind of leaks into the hamstring,” Padres manager Mike Shildt said Tuesday.

The Padres remain hopeful Cronenworth can avoid the injured list.

Jurickson Profar played first base in place of Cronenworth on Tuesday and occupied the third spot in the order, going 1-for-3 with a walk and two runs scored.

Profar will remain in the three-hole, while center fielder Jackson Merrill is up to No. 6 in the lineup for the first time this season.

Tyler Wade will bat seventh and play third base, Batten is in the eight-hole and back-up catcher Kyle Higashioka is batting ninth in day-after-night game.

Before the game, Brewers manager Pat Murphy announced right-hander Bryce Wilson as the starting pitcher. The Brewers also optioned left-hander Jared Koenig to Triple-A Nashville, selected the contract of right-hander Tobias Myers and designated right-hander Vladmir Gutierrez for assignment.

Here is the Brewers lineup:

Series finale coming up 📺: @BallySportWI 📻: @620wtmj #ThisIsMyCrew X @fleet_farm pic.twitter.com/BpqLfOYhEU — Milwaukee Brewers (@Brewers) April 17, 2024

Wednesday’s pitching matchup

Padres RHP Michael King (2-0, 4.19 ERA)

Through four appearances, King has just one quality start and a 19-to-13 strikeout-to-walk ratio over 19⅓ innings. King’s only appearance against the Brewers was allowing two runs (one earned) in five innings in a start last year in which he struck out nine and walked one.

Here is how King has fared against current Brewers:

• SS Willy Adames (2-for-5, 3B, RBI, BB, K)
• C William Contreras (0-for-3, K)
• OF Sal Frelick (1-for-2, BB, K)
• INF Owen Miller (0-for-2)
• 2B Brice Turang (1-for-2)

Brewers RHP Bryce Wilson (1-0, 5.19 ERA)

He’s making his first start of the season after striking out 10 against one walk in 8 ⅔ innings out of the bullpen. Wilson last started a game in 2022, as he has a 5.50 ERA in that role and a 3.69 ERA as a reliever. He threw 42 pitches in three innings of one-run ball in his last appearance on April 10, so expect a Johnny Wholestaff approach to the game from the Brewers.

Here is Wilson’s history with current Padres:

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RBI singles by Anthony Rendon and Taylor Ward in the 9th inning lead Angels beat past Rays 5-4

Los Angeles Angels’ Anthony Rendon (6), Mike Trout (27) and Mickey Moniak (16) celebrate after the team’s win over the Tampa Bay Rays in a baseball game Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Los Angeles Angels’ Anthony Rendon, center, waits at home plate to congratulate Taylor Ward, right, after Ward’s two-run home run off Tampa Bay Rays releiver Kevin Kelly (not shown) during the ninth inning of a baseball game Monday, April 15, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Los Angeles Angels’ Logan O’Hoppe (14) greets Mike Trout (27) after Trout’s solo home run off Tampa Bay Rays starter Zack Littell during the first inning of a baseball game Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Los Angeles Angels starter Reid Detmers pitches against the Tampa Bay Rays during the first inning of a baseball game Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Los Angeles Angels manager Ron Washington sits in the dugout before the team’s baseball game against the Tampa Bay Rays on Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Los Angeles Angels’ Mike Trout runs the bases after hitting a solo home run off Tampa Bay Rays starter Zack Littell during the first inning of a baseball game Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Tampa Bay Rays starter Zack Littell pitches to a Los Angeles Angels batter during the first inning of a baseball game Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Los Angeles Angels starter Reid Detmers pitches to a Tampa Bay Rays batter during the first inning of a baseball game Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

Los Angeles Angels’ Luis Rengifo watches his RBI double off Tampa Bay Rays starter Zack Littell, next to catcher Rene Pinto during the sixth inning of a baseball game Wednesday, April 17, 2024, in St. Petersburg, Fla. (AP Photo/Steve Nesius)

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ST. PETERSBURG, Fla. (AP) — Anthony Rendon and Taylor Ward hit run-scoring singles off struggling closer Pete Fairbanks in the ninth inning and the Los Angeles Angels beat the Tampa Bay Rays 5-4 on Wednesday night.

The victory came a day after after Tampa Bay scored twice with two outs in the ninth to tie it and won 7-6 on Amed Rosario’s 13th-inning RBI single.

“You’ve got to be resilient,” Angels manager Ron Washington said. “You’ve just got to keep driving, and we did. I think we did a good job of experiencing what we went through last night and coming out there tonight and just trying to take the game that we play today.

“And I think we did that.”

Fairbanks intentionally walked Mike Trout before Ward’s two-out hit. Ward has 21 RBIs in 18 games.

“I wouldn’t have pitched to Mike myself,” Washington said. “That’s why we’ve got Taylor Ward behind him. Pick your poison.”

Fairbanks (0-2) has 9.00 ERA in eight games this season with seven earned runs allowed in seven innings.

“I thought it generally (stunk),” Fairbanks said.

Rosario gave the Rays a 4-3 lead with a two-run homer in the eighth off Hunter Strickland (1-0), who allowed a two-out single in a scoreless ninth before sealing the win.

Trout hit his eighth homer, a 400-foot first-inning solo drive to center off Zack Littell. He has gone deep four times in six games against the Rays this season and tied Carlton Fisk for 79th on the career home runs list with 376.

Angels starter Reid Detmers gave up two runs — one earned — and seven hits in 5 1/3 innings and saw his ERA rise from 1.04 to 1.19. The lefty had allowed one unearned run, including a no-hitter on May 22, 2022, over 13 innings in his other two starts against Tampa Bay.

Los Angeles took a 2-1 lead following nifty baserunning by Nolan Schanuel in the fifth.

Schanuel was on first when Zach Neto popped out to Yandy Díaz. The first baseman gave the ball to Littell and while the pitcher was walking back to the mound, Schanuel safely advanced to second and then scored on Rendon’s single.

“A heads-up play,” Washington said.

Luis Rengifo made it 3-1 on a run-scoring double in the sixth on Littell’s career-high 107th and final pitch.

Littell gave up three runs and eight hits in 5 2/3 innings, and his ERA rose from 1.17 to 2.14.

Randy Arozarena got the Rays within 3-2 when he drove in just his third run over the last 14 games in the sixth.

ANGELS ADDITION

The Angels signed reliever Bryan Shaw to a minor league contract and assigned him to Triple-A Salt Lake. The 36-year-old was designated for assignment by the Chicago White Sox on April 12.

TRAINER’S ROOM

Angels: Reliever Robert Stephenson needs elbow surgery and will miss the rest of the season. He signed a $33 million, three-year contract during the offseason. .. INF Brandon Drury (hamstring) was out of the lineup for the second straight game. He’s expected to start Friday at Cincinnati.

Angels RHP Griffin Canning (0-2, 9.88 ERA) and Rays RHP Ryan Pepiot (1-2, 5.40 ERA) are Thursday’s starters.

AP MLB: https://apnews.com/hub/MLB