Question

Explain the functions of the Reserve Bank of India (RBI).

Answer 1

Instructions: Explain the various functions of the Reserve Bank of India (RBI).

Solution:

• The RBI prints currency notes except one rupee note and its subsidiary coins in India.
• The RBI operates as a banker to the banks.
• The RBI oversees the operations of other banks in India.
• The RBI provides loans to other banks in India for certain reasons such as client lending. It serves as a final resort for all banks in financial difficulties.
• The RBI serves as a banker to the government. The Reserve Bank of India serves as the banker to the Union of India's national and state governments.
• The RBI controls the economy's credit and money supply. It raises interest rates to reduce the amount of loans and lowers interest rates to boost the volume of loans.