Q.Write a note on the functions of Reserve Bank of India.

The RBI, established in 1935, is India's central bank. Its chief functions are: (1) monopoly of note issue, (2) banker, agent and adviser to the government, (3) bankers' bank and lender of last resort, (4) custodian of foreign exchange reserves, (5) controller of credit, and (6) developmental and promotional functions. ## Functions of the Reserve Bank of India 1. Issue of currency notes: the RBI has the sole right (monopoly) to issue currency notes (except the one-rupee note and coins, which are issued by the Government). It keeps the note issue elastic and maintains public confidence in the currency. 2. Banker to the government: the RBI acts as banker, agent and financial adviser to both the central and state governments. It keeps their accounts, makes and receives payments on their behalf, manages public debt, and advises on economic and financial matters. 3. Bankers' bank and lender of last resort: the RBI acts as the bank of all commercial banks. Banks keep a part of their reserves with it, it provides them funds in times of need by rediscounting bills, and it acts as the lender of last resort when banks face a crisis. 4. Custodian of foreign exchange reserves: the RBI keeps and manages the country's gold and foreign exchange reserves and maintains the external value (stability) of the rupee. 5. Controller of credit: this is the most important function. The RBI controls the volume of credit created by commercial banks using quantitative methods (bank rate, open market operations, cash reserve ratio, statutory liquidity ratio) and qualitative methods (margin requirements, moral suasion, direct action) to ensure price stability and ec …