Functions of the Reserve Bank of India

Hello friends, in today's article we are going to talk about the country's central bank, Reserve Bank of India. As you know that every country has its own central bank. Every country has only one central bank but countries like America have more than 1 (12) central banks. Now the question comes that what are these central banks, what are their functions, so let us know in detail about what is a central bank and what are its functions. After reading this article, you hardly want to read another article, then definitely read the article till the end. So let's start.

Functions of the Reserve Bank of India

What is Reserve Bank of India?

         See, every country has its own central bank, about which we have told you above, similarly our country India also has a central bank named Reserve Bank of India. The establishment of which was first recommended by the Hilton Young Commission, after which the Banking Act was enacted in 1934. The Reserve Bank was established on 1 April 1935 and was nationalized on 1 January 1949. Since then till now the Reserve Bank is doing its work in the best way. So let's know about its work.

Main functions of the Reserve Bank of India

act as banker of banks

    The Reserve Bank of India acts as a bank for banks. When we have to deposit our money, withdraw or need a loan, we go to the bank and our work is done. Similarly, when the country's banks need loans, deposits or withdrawals, they go to the Reserve Bank of India, RBI solves their problems.

Worked as an advisor to the Government of India

     The Reserve Bank of India is to act as the bank, agent and advisor to the Government of India and the State Governments. It undertakes all banking functions of the State and Central Governments and also advises the Government on matters relating to economic and monetary policy. gives.

Management of debt for the Government of India

     When we need a loan, we go to the Commercial Bank, and when the commercial banks need it, they go to the Reserve Bank, similarly, when the government needs a loan, the country's central bank, the Reserve Bank Goes to and the Reserve Bank arranges loans for the government.

The work of printing and issuing notes in the country of India

      In India, the Reserve Bank of India has the monopoly of printing currency ie notes for the country. Except the one rupee note, the printing of all other notes is done by the Reserve Bank. The printing of notes is done by the Reserve Bank on the basis of Minimum Reserve System. The minimum reserve system was introduced in 1957. In which keeping gold worth 115 crores and security worth 85 crores, the Reserve Bank can print as many notes as it wants, but for this it has to take permission from the Government of India.

Banks of the country and foreign banks which exercise control over all the banks functioning in India

The Reserve Bank of India has the status of the Supreme Bank of India, therefore the Reserve Bank of India is also called the Bank of Banks because all the commercial banks and foreign banks who are working by opening their branches in India have their accounts Jokha is monitored by the Reserve Bank of India. The license of these banks is issued by the Reserve Bank only and all these banks have to follow the rules and orders of the Reserve Bank.

conservation of foreign exchange reserves

With the objective of keeping the foreign exchange rate stable, the Reserve Bank of India buys and sells foreign currencies and also safeguards the country's foreign exchange reserves. When the supply of foreign currency decreases in the foreign exchange market, the Reserve Bank of India sells foreign currency in this market so that its supply can be increased and when the supply of foreign currency increases in the economy If it goes, RBI buys foreign currency from the foreign exchange market. The Reserve Bank of India does the work of protection of foreign exchange reserves.

credit control

      The Reserve Bank of India undertakes the responsibility of controlling the credit emitted by the commercial banks. To achieve this objective it makes extensive use of quantitative and qualitative techniques to effectively control and regulate credit in the country. Reserve Bank of India sees that there is sufficient money supply in the economy and this may lead to inflationary situation in the country, then it reduces the money supply in the market through its tight monetary policy and When there is a decrease in the money supply in the economy, it increases the money supply in the market. In this way, the Reserve Bank of India controls the credit emitted by the commercial banks.

act as lender of last resort

  When we need a loan, we go to the Commercial Bank, when the Commercial Bank needs a loan, they go to the Reserve Bank, then the Reserve Bank of India gives them a loan. But in order to give loan, the bank accepts deposits from them as some security. And when the Government of India is in need, it also goes to the Reserve Bank and the Reserve Bank arranges loans to the Government of India, in this way the Reserve Bank acts as the last lender.

Promotion work for the economic development of the country

The Reserve Bank of India also does many developmental and promotional activities for the economic development of the country. On the one hand, the Reserve Bank of India develops money and capital market and on the other hand, through commercial banks for the economic development of the country, it provides finance to agriculture and industry, business sector at a reasonable price so that the country's economic development can happen.

  Other Functions of Reserve Bank of India

     The Reserve Bank of India also does many other development works. These functions include approval and implementation of loans for agriculture, purchase and sale of securities and commercial bills, lending for government purchases and sale of valuables, etc. It acts as the representative of the Government of India to the International Monetary Fund. Also serves as and represents the membership of India.

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