Q.Explain the role and functions of the Reserve Bank of India as the central bank of the country.

Every commercial bank in the country ultimately answers to one apex authority whose job is regulation and stability, not ordinary public banking.

The Reserve Bank of India (RBI) is India's central bank, standing apart from every commercial, cooperative and regional rural bank because its purpose is to regulate the entire monetary and banking system, not to earn a profit from ordinary public banking.

Its key functions are: (1) issue of currency — the RBI holds sole legal authority to issue currency notes in India; (2) banker to the government — managing the receipts, payments and public debt of the central and state governments; (3) banker's bank — holding commercial banks' cash reserves and acting as lender of last resort in genuine emergencies; (4) controller of credit — using tools such as the cash reserve ratio, bank rate and open-market operations to expand or contract the credit commercial banks can create; (5) custodian of foreign exchange reserves — holding and managing the country's reserves and regulating the foreign exchange market; (6) regulator and supervisor of the banking system — licensing, inspecting and setting prudential standards for every bank; and (7) promotional and developmental functions — encouraging financial inclusion and priority-sector credit. …

List each RBI function under a clear label, in one line each, then close by tying the functions back to why they …

Do not describe the RBI as a bank that accepts deposits from and lends to the general public — it deals with the government and with o …