The RBI has been empowered by law to super­vise, regulate and control the activities of commer­cial and cooperative banks. The RBI periodically in­spects banks and asks them for returns and neces­sary information. Financial decisions taken by the government that influence the economy by money spending and buying ability of its citizens is known as fiscal policy. Get all the important information related to the SSC Examination including the process of application, important calendar dates, eligibility criteria, exam centers etc.

It is responsible for deciding the direction of the monetary policies designed. This is done by directing the open market operations as a priority. Most of these offices are located in the state capitals to ensure the right running of the state economy. The Indian economy and its regulation is in the hands of the RBI.

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The official external reserves of the country consist of monetary gold and foreign assets of the Reserve Bank, besides SDR holdings. The Reserve Bank, as the custodian of the country’s foreign ex- change reserves, is vested with the duty of managing the investment and utilisation of the reserves in the , most advantageous manger. The RBI provides financial assistance to com­mercial banks and State cooperative banks through rediscounting of bills of exchange.

• However, soon after, in 1937, it was permanently shifted to Mumbai.
• At present, notes of denominations of rupees two, five, ten, twenty, fifty, one hundred and five hundred are issued by the RBI.
• According to the current trends, as many as 16% of the total questions from the Finance section are asked from RBI and monetary policy.
• The commercial banks hold deposits in the Reserve Bank and the latter has the custody of the cash reserves of the commercial banks.
• The clearing of accounts has now become an essential function of the Reserve Bank.

These are implemented by announcing monetary policies at regular intervals. The monetary policy involves the management of interest rates and money supply. The central bank of India tweaks the money supply to achieve objectives such as liquidity, inflation, and consumption.

Central and State Government’s Debt Manager

RBI also acts as agent to the Government through performing the transfer of funds from Government to beneficiaries. RBI also advises the Government during some circumstances like not to go for over expenditure during inflation. If you’ve any difficulty in preparing for these topics, you can consider joining our detailed functions of rbi class 10 course on RBI Grade B Mains. We’re providing online classes, mock tests, and doubt-solving sessions to help you achieve your dreams. Check out our range of RBI Grade B preparation courses for an enhanced learning experience. Should you have any queries, you can get in touch with our course counselors to seek assistance.

The RBI controls credit to en­sure price and exchange rate stability. Like any other central bank, the RBI acts as a sole currency authority of the country. It issues notes of every denomination, except one-rupee note and coins and small coins, through the Issue Department of the Bank. A commercial bank’s main functions are to receive deposits and lend money. Savings, current, and time savings all seem to be types of deposits. A commercial bank also provides money to its customers based on loans, cash credit, overdrafts, and bill discounting, among other things.

What is the Reserve Bank of India’s role?

At present, notes of denominations of rupees two, five, ten, twenty, fifty, one hundred and five hundred are issued by the RBI. Issue of Notes —The Reserve Bank has a monopoly for printing the currency notes in the country. It has the sole right to issue currency notes of various denominations except one rupee note (which is issued by the Ministry of Finance). It is the function of the RBI to help in the operations of other banks and to advise them when needed.

The last role is critical to the government’s borrowing plan from the general public (including banks), which became increasingly important for mobilising money for public-sector project funding. After the Central Government of India and the Ministry of Finance, its RBI plays the most crucial role in driving the economy of India. RBI extends its services to the other commercial banks of India and thus these banks provide banking services to the netizens.

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The legal provision regarding the management of foreign exchange reserves is mentioned in RBI Act 1934. In India, issue of banknotes in denominations of 10, 20, 50, 100, 200, 500, and 2000 rupees. Because the Reserve Bank of India issues these currencies, they are referred to as banknotes. Credit is controlled by the Reserve Bank in accordance with the economic priorities of the government.

Price stability, on the other hand, does not mean that there will be no alterations in the price of the things but it simply means that inflation should be controlled. RBI also aims to promote industrial and agricultural developments. Get all the important information related to the Bank Exam including the process of application, important calendar dates, eligibility criteria, exam centers etc. Priority sector guidelines don’t provide a preferential interest rate for loans to the sector.