Objective:
According to The Preamble - Reserve Bank of India under Reserve Bank of India Act, 1934 as umbrella act has following objective: “to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.”
Functions of RBI:
1. It acts as Monetary Authority by formulating, Implementing and monitoring the policies with an objective to maintain price stability and ensuring adequate flow of credit to productive sectors.
2. It Regulates and supervises the financial system by prescribing the broad parameters of banking operations within which the country's banking and financial system functions. The major objective is to maintain public confidence in the system, protect depositor’s interest and provide cost-effective banking services to the public.
3. It manages the flow of Foreign Exchange under the Foreign Exchange Management Act, 1999 with an objective to promote global trading and facilitating external trade, payment and promote orderly development and maintenance of foreign exchange market in India.
4. It acts as the authority for the issuing the currency exchanges or destroying currency and coins that are not fit for circulation. The major objective is to give the public adequate quantity of supplies of currency notes and coins and to ensure its quality.
5. It also helps in the development of the nation by performing a wide range of promotional functions to support national objectives and various government projects.
6. It also acts as the Banker to the Government by performing merchant banking function for the central and the state governments. It also funds various plans or schemes run by Government i.e. Acts as their banker.
7. It acts as the Banker to banks and helps in maintaining banking accounts of all scheduled banks.
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