Reserve Bank of India (RBI)
Candlefocus EditorThe Reserve Bank of India has a unique set of objectives. It has a mandate to promote monetary policy, economic stability, and a sound financial system. It also has a mandate to protect the financial system of the country, through various means – like regulation and supervision of various financial institutions. The Reserve Bank of India also acts as the lender of last resort for the banking sector, provides bridging finance to banks, and manages the payment and settlement systems in India.
The Reserve Bank of India is responsible for providing guidance to the Government of India and the public sector, in matters pertaining to monetary policy and financial stability. It also acts as a controller of the currency, and has responsibility for implementing all monetary policies in the country. The Reserve Bank of India further performs the primary function of issuing and maintaining the supply of currency notes, which are backed by gold or the foreign exchange reserves of India.
In order to ensure monetary stability and transparency, the Reserve Bank of India also safeguards the value of the Indian rupee, by managing the holdings of foreign exchange reserves. The foreign exchange reserves of India are composed of gold, special drawing rights and foreign currencies. In addition, the Reserve Bank of India has the authority to oversee and supervise the operations of all commercial banks, financial institutions and non-banking finance institutions. Its main purpose is to ensure that the banking system of India is safe, sound and secure.
To ensure monetary stability and transparency, the Reserve Bank of India also provides guidelines and suggestions for the Government of India regarding policies related to finance, taxation, financial regulation and control, and banking supervision. The Reserve Bank of India has a central Board of Directors, and five regional offices, which are located at Mumbai, Kolkata, Chennai, New Delhi and Hyderabad. It is an autonomous body, with operational and administrative functions which are focused on security, stability, and economic progress of the country.
Overall, the Reserve Bank of India is a key regulator and supervisor of the financial sector in India, and is responsible for maintaining sound and prudent national monetary policies. It also monitors and regulates various banking, financial, and non-banking finance institutions, and provides government guidelines for financial policies. The Reserve Bank of India is an indispensable part of India’s financial system and is a major contributor to its economic progress.