Q.Explain the functions of RBI.

The RBI, India's central bank, issues currency, acts as banker to the government and to banks, controls credit, manages foreign exchange and performs developmental functions — together regulating money and credit in the economy.

The Reserve Bank of India (RBI), established in 1935, is the central bank of India. Its main functions are:

1. Issue of currency notes. The RBI has the sole monopoly to issue currency notes (except one-rupee notes and coins, issued by the government). This ensures uniformity and control over the supply of currency.
2. Banker to the government. It manages the banking accounts of the central and state governments, receives their money, makes payments, gives short-term loans (ways-and-means advances) and manages public debt. It also acts as financial adviser to the government.
3. Banker to banks / bankers' bank. All commercial banks keep a part of their reserves with the RBI. It provides them clearing, settlement and remittance facilities and acts as the leader of the banking system.
4. Lender of the last resort. When commercial banks face a shortage of funds and cannot get help elsewhere, the RBI lends to them and helps maintain confidence in the banking system.
5. Controller of credit (monetary policy). The RBI controls the supply of money and credit using quantitative tools (bank rate, repo and reverse repo rates, cash reserve ratio, statutory liquidity ratio, open market operations) and qualitative tools (margin requirements, credit rationing, moral suasion) to keep prices stable and support growth. …