Q.(a) Classify the various functions of Reserve Bank of India. (any 5)

(a) RBI functions fall into traditional central-banking functions (note issue, banker to government, bankers' bank, forex custodian, lender of last resort, credit control), developmental functions and supervisory functions. (b) MUDRA Bank refinances lenders to micro enterprises under PMMY through the Shishu, Kishor and Tarun schemes.

In the Tamil Nadu HSC Commerce syllabus, this Part-IV OR question covers the RBI and MUDRA Bank. Both alternatives are answered.

(a) Classification of the functions of the Reserve Bank of India (any five):

The RBI's functions can be grouped as follows:

• Traditional / central banking functions:
  • Issue of currency notes: The RBI has the sole right to issue currency notes (except one-rupee notes and coins).
  • Banker to the government: It manages the banking accounts, receipts and payments of the central and state governments.
  • Bankers' bank: It acts as banker, supervisor and lender of last resort to commercial banks.
  • Custodian of foreign exchange reserves: It maintains and manages the country's foreign exchange reserves.
  • Controller of credit: It regulates the money supply and credit in the economy using quantitative and qualitative tools.
• Developmental / promotional functions: Promoting banking habits, developing rural and agricultural credit, and supporting industrial and export finance.
• Supervisory functions: Granting licences to banks, inspecting them and regulating their working to protect depositors.

(b) MUDRA Bank:

• Full form and launch: MUDRA stands for Micro Units Development and Refinance Agency. It was launched in 2015 under the Pradhan Mantri MUDRA Yojana (PMMY).
• Objective: To "fund the unfunded" — to provide finance and refinance to small and micro business units that lack access to formal credit.
• Working: It does not lend directly to borrowers; instead it refinances banks, NBFCs and micro-finance institutions that lend to micro enterprises. …