FUNCTIONS PERFORMED BY RBI:-

Main Functions:-

1. Monetary Authority:-
The Reserve Bank of India Formulates, implements and monitors the monetary policy. Its main
objective is maintaining price stability and ensuring adequate flow of credit to productive sectors.

2.Regulator and supervisor of the financial system:- Prescribes broad parameters of banking operations
within which the country’s banking and financial system functions. Their main objective is to maintain
public confidence in the system, protect depositors’ interest and provide cost-effective banking services
to the public.

3.Manager of Exchange Control:-

The manager of the exchange control department manages the Foreign Exchange Management Act,
1999. His main objective is to facilitate external trade and payment and
promote orderly development and maintenance of foreign exchange market in India.

4. Issuer of currency:-
The person who is issuer issues and exchanges or destroys currency and coins not fit for circulation. His
main objective is to give the public adequate quantity of supplies of
currency notes and coins and in good quality.

5. Developmental role:-
The reserve bank of India performs a wide range of promotional functions to support national objectives.
The promotional functions are such as contests, coupons, maintaining good public relations, and many
more…..

.6 Related Functions:-
There are also some of the relating functions to the above mentioned main functions. They are such as
Banker to the Government, Banker to banks etc….

Banker to the Government : performs merchant banking function for the central and the state
governments; also acts as their banker.

Banker to banks : maintains banking accounts of all scheduled banks.

Supervisory functions:-
The Reserve Bank act, 1934 and the Banking Regulation act, 1949 have given the RBI wide powers of
supervision and control over commercial and co-operative banks, relating to licensing and
establishments, branch expansion, liquidity of their asset, management and methods of working,
amalgamation, reconstruction, and liquidation.

The RBI is authorized to carry out periodical inspections of banks and to call for returns and necessary
information from them. The supervisory functions of the RBI have helped agreat deal in improving the
standard of banking in India to develop on sound lines and to improve the methods of their operation.
Promotional functions:-

1
With economic growth assuming a new urgency since Independence, the range of the Reserve Bank’s
functions has steadily widened. The bank now performs a variety of developmental and promotional
functions, which, at one time were regarded as outside the normal scope of central banking. The RBI
was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and
establish and promote new specialized financing agencies.

Major Functions:-

1. The Department attends to the core (central part) statutory function of note and coin issue and
currency management. This involves forecasting the demand for fresh notes and coins, placing the
indent with four printing presses and mints, receiving supplies against those indents and distributing
them through the 18 offices (15 Issue Offices + 3 Sub-Offices) of the Bank, a wide network of currency
chests, repository (where the reports are stored) and small coin depots. The Department also keeps an
account of notes in circulation and also the stocks at RBI offices and currency box. (A currency box is
an extended arm of the Issue Department maintained with a commercial bank where the RBI stores fresh
and re-issuable notes and allows the commercial banks to withdraw cash for its requirements and deposit
its excess cash. A repository is an extension of the currency box wherein a portion of the currency chest
balance is permitted to be held at one or more other localbranches of the same bank). Soiled (torn/dirty)
notes are also stocked in the boxes pending transportation to RBI.

2. The Department administers the Reserve Bank of India Rules. The rules lay down the circumstances
in which value of torn and mutilated notes can be refunded. Soiled
notes which are unfit for circulation are mopped (cleaned) up from circulation for destruction.

3. The Department reviews various security features of the currency notes for incorporation in the notes
from time to time. It studies the features of the forged (artificial) notes detected and seized with a view
to determining the steps needed to be taken to strengthen the integrity of the notes. The Department also
acts as a nodal Department for the Bharatiya Reserve Bank Note Mudran Ltd.