Role and Functions of RBI
                     Role and 
Functions of 
RBI 
Who is the RBI?
• RBI is India’s Central Bank. Every country has 
its own Central Bank. The US has Federal 
Reserve Bank (FED) and England has Bank of 
England (BOE) while the whole of Europe has 
European Central Bank (ECB).
Source: www.stocktalk.in 2
Issuer of Currency
• The RBI has the sole right to issue new 
currency notes and coins, exchanges or destroy 
currency not fit for circulation.
• Objective: To give the public adequate quantity 
of supplies of currency notes and coins and in 
good quality.
Source: www.stocktalk.in 3
Monetary Authority
• RBI formulates, implements and monitors the 
monetary policy. This policy is the most 
important tool that the RBI has. 
• Using this policy RBI manages the interest 
rates offered by banks on loans and deposits 
and which affects the inflation and deflation in 
the country. In simple words, lower rates give 
rise to higher inflation and vice versa.
Source: www.stocktalk.in 4
Manager of Foreign 
Exchange
• RBI also manages the flow of foreign currency 
in Indian economy by enforcing the Foreign 
Exchange Management Act, 1999. As part of 
this function, the RBI makes sure that the 
exchange rate value of Indian National Rupee is 
maintained in the international markets.
Source: www.stocktalk.in 5
Regulator and 
Supervisor of the 
Financial System
• RBI prescribes broad parameters of banking 
operations within which the country’s banking 
and financial system functions. 
• It makes sure that the banks are following the 
issued guidelines by overlooking their financial 
operations and in cases of banking failures, RBI 
comes ahead to safeguard the depositors’ 
money by bailing out the distressed bank.
Source: www.stocktalk.in 6
Regulator and 
Supervisor of 
Payment and 
Settlement 
Systems
• RBI introduces and upgrades safe and efficient 
modes of payment systems in the country to 
meet the requirements of the public at large. 
• This includes implementing various advanced 
technologies like the NEFT, RTGS or the latest 
Unified Payment Interface (UPI) or overlooking 
the operations of National Financial Switch 
(NFS) which is necessary for ATMs.
Source: www.stocktalk.in 7
Banker to the 
Government
• Performs merchant banking function for the 
central and the state governments; also acts as 
their banker. This includes dealing with 
financial securities issued by the Government 
like treasury bills, infrastructure bonds, etc.
Source: www.stocktalk.in 8
Banker to the 
banks
• To maintains banking accounts of all scheduled 
banks. This includes managing the minimum 
reserve capital balance required to be held by 
the banks with the RBI.
Source: www.stocktalk.in 9
 Developmental 
Role
• Performs a wide range of promotional functions 
to support national objectives. 
• This includes work like providing timely credit 
to the productive sectors of the economy, 
creating institutions to build financial 
infrastructure like UPI, NEFT, etc., expanding 
access to affordable financial services and 
working on financial inclusion of all classes of 
the society.
Source: www.stocktalk.in 1
0
THANK YOU