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The Reserve Bank of India is an institution functioning under the provisions of Reserve Bank of India Act, 1934. It started its operations from 1st of April 1935.It is known as the "Banker's Bank" or "banker to the Government". Since its inception it has been discharging its functions quite satisfactorily.

The basic function of the RBI is stated in the preamble to the Act which is as follows

"...to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage."

    Hence the baisc functions are

(1)Regulation and issue of currency notes except one ruppee note and all coins which are issued by the Government of India.

2) Monetary control

3)Fiscal control

4)Credit control

5) currency management etc.

        The main functions actually discharged by RBI may be summarised broadly as under.

1)Issue of currency note of Rs 2,5,10,20,50,100,500 and Rs 1000. The RBI issues them and withdraws them. There are around 17 issue offices. The currency is kept in the currency chests either by RBI directly or chest kept by other banks on behalf of RBI.There are around 4000 such chests in India.

2)Supervisory role: It has supervisory function and controls commercial banks, All India FIIs, NBFC's, State Co-op Banks etc.

3) Creation of Specialised agencies like NABARD, EXIM bank, SIDBI,DICGC and IDBI etc.

4) Contol of Foreign Exchange. It maintains and balances the external value of Indian Ruppee against foreign currencies. It keeps foreign exchange reserves in gold, foreign securities etc.

5)Monetaory control through regulation of credit thro banking system, sale and purchase of govt securities, pumping and withdrawl of money to and from the circulation mechanism, framing of Fiscal policy, Exim policy and foreign trade policy etc.

6)Acting as banker's bank by extending refinance, rediscounting of bills etc, maintaining Bank Rate maintaining CRR, SLR etc etc.

7)banker to govt by accepting govt deposits, extending ways and means finance to Central/ State govts, issuing and purchasing Govt Securities, treasury bills etc.

8) Selective credit contol to assure the channelising of the money to the priority and desired sectors etc.

9) Regulating lending rates by banks and to control banking system generally.

   The above analysis is very breif and there are chances that I have omitted to provide some functions.




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Sivadas Chettur Online
on 26 September 2009
Published in Civil Law
Views : 3267
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