Q.Explain the functions of the Reserve Bank of India.

As India's central bank, the RBI's job is regulating the whole banking and monetary system, not competing with commercial banks for ordinary customers.

The Reserve Bank of India (RBI) is India's central bank, and its functions can be grouped as follows:

1. Issue of currency — sole legal authority to issue currency notes (other than one-rupee notes/coins, issued by the government).
2. Banker to the government — manages the receipts, payments and public debt of the central and state governments.
3. Banker's bank — holds commercial banks' cash reserves and acts as lender of last resort in a genuine financial emergency.
4. Controller of credit — uses the cash reserve ratio, bank rate and open-market operations to expand or contract the credit commercial banks can create, directly applying the credit-creation mechanism covered earlier in this chapter.
5. Custodian of foreign exchange reserves — holds and manages the country's forex reserves and regulates the forex market to keep the rupee's exchange rate stable.
6. Regulator and supervisor — licenses new banks, inspects existing ones, and sets prudential standards such as minimum capital and reserve requirements. …

Group the functions under clear headings and state, for each, why an ordinary commerci …

Do not describe the RBI as competing with commercial banks for ordinary depositors — the RBI does not offer e …