The Reserve Bank of India (RBI) is the central bank of India, which was established on Apr.

1,
1935, under the Reserve Bank of India Act. . The RBI was originally set up as a private entity, but
it was nationalized in 1949. The reserve bank is governed by a central board of directors
appointed by the national government. The government has always appointed the RBI’s
directors, and this has been the case since the bank became fully owned by the government of
India as outlined by the Reserve Bank of India Act. The Reserve Bank of India uses monetary
policy to create financial stability in India and is responsible for overseeing the country’s currency
and credit system.

Role of RBI

1. The Reserve Bank of India has the exclusive right to issue new currency and coins, exchange
currencies that are not suitable for circulation, or destroy them.

2. The Reserve Bank of India formulates, implements and monitors monetary policy; this policy is
the most important tool available to the Reserve Bank of India. Through this policy, the Reserve
Bank of India manages the interest rates on loans and deposits provided by banks, which will
affect the country’s inflation and deflation.

3. RBI additionally manages the go with the drift of overseas foreign money in Indian economic
system through implementing the Foreign Exchange Management Act, 1999. As a part of this
function, the RBI makes positive that the exchange rate value of Indian National Rupee is
maintained within side the worldwide markets.

4. RBI prescribes extensive parameters of banking operations within which the country’s banking
and financial system functions. It makes certain that the banks are following the issued
guidelines through overlooking their monetary operations and in The Reserve Bank of India (RBI)
is the Central Bank of India, established on April 1, 1935 under the Reserve instances of banking
failures, RBI comes in advance to guard the depositors’ cash through bailing out the distressed
bank.