Reserve Bank of India – Functions and Guidelines by Bank

All private sector and public sector banks are regulated by Reserve Bank of India. RBI, which is known as India’s Central Bank; it formulates policies pertaining to the banking system to ensure smooth functioning.


Reserve Bank of India’s most important function is to determine the foreign currency exchange rates which have a huge impact on international trading and the share markets. RBI is the backbone of the country’s economy, and it ought to maintain robustness and stability of the Indian banking system. It performs a number of tasks with the aid of various departments that are discussed below -


Department Of Currency Management:


The department of currency management, as the name suggests, is related to all the dealings of currency. It takes care of making coins and printing notes, releasing currency in adequate amount, and even exchanging the old notes with fresh ones. In other words, it is the Department of Currency Management which is responsible for the availability of notes and coins in the market. They regulate the flow of currency by decreasing or increasing it.


Customer Service Department:


Like a Customer Service Department in any company, RBI’s Customer Service Department is meant to lend appropriate focus on customer service related to banking issues in ways more than. The department’s main aim is to solve the customer issues and to look into various complaints launched by the customers. It is also quite effective, unlike most customer service departments in many other banks and companies - both private and government.


Urban Banks Department:


This department looks after the co-operative banks, and it has the following three functions:


1. Regulatory functions

2. Supervisory functions

3. Developmental functions


RBI carries on many inspections and surveys on urban cooperative banks and passes on instructions whenever necessary. It also takes care of the development of the urban cooperative banks and directs the economy of India by instructing other banks and regulating their important functions.


Rural Planning and Credit Department:


The credit and rural planning department looks after the origination of policies that also include rural employment and agricultural programmes for the needs of rural area. These policies help in the development of rural areas and are specifically meant for those areas only.


The Rural Planning and Credit Department also monitors small scale and agricultural industries that are present in rural areas. It frames policies concerning priority sector lending and offers policy and financial support to NABARD.


On the whole, the department acts as the regulator to cooperative banks and regional rural banks.


Foreign Exchange Department


The foreign exchange department mainly concentrates on NRI investments, and provides services like external trade, maintaining foreign exchange, and orderly development.


Department of Information Technology


The IT department shoulders technology-centric tasks. It takes care of the computerization of RBI and monitors the technological progress in banks.


Main Functions of RBI:


  • Monetary Authority: The major objective of monetary authority is to ensure that adequate flow is maintained and that price stability of credit flow to productive sectors is adequately regulated.


  • Supervisor and Regulator of Financial System: The major objective of the Supervisor and Regulator of Financial system is to maintain the public confidence, protect depositors' interest and present cost-effective services to the public. Banking operations and its broad parameters are prescribed by the supervisor of financial system.


  • Foreign Exchange Manager: Foreign Exchange Manager’s objective is to progress the payment and look after the external trade of foreign exchange in India.


  • Currency Issuer: The major objective of the currency issuer is to supply good quality coins and currency notes to the public- exactly what keeps the public happy!


  • Developmental role: Developmental role performs promotional functions for supporting the national objectives. Yes, even Reserve Bank of India requires promotion; who doesn’t!



All over the country, RBI has got 22 regional offices; most of them are located in capital cities.


Currently, Reserve Bank of India supervises the financial institutions and looks after consolidated accounting, and all the legal issues concerning bank frauds, and supervisory ratings for various banks operating in the country.


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