The Reserve Bank of India (RBI) was established in 1934 with the main objectives of managing the monetary and credit system of India, promoting balanced development of banking, and establishing monetary relations with other countries. As the central bank, the RBI performs key monetary functions like issuing currency, acting as banker to the government and commercial banks, and managing foreign exchange reserves. It also carries out important non-monetary roles such as collecting and publishing banking statistics, promoting rural development, and regulating the banking system.

1. Presented By, Sachin H

2. OBJECTIVE AND REASONS FOR ESTABLISHMENT OF RBI
The main objectives for establishment of RBI as the central bank of India were as follows :
 To manage the Monetary and credit system of the country
 For balanced and systematic development of banking in the country
 For the development of organized money market in the country
 For proper arrangement of agriculture finance
 For proper arrangement of industrial finance
 For proper management of public debt
 To establish monetary relations with other countries of the world and international financial
institutions
 For centralization of cash reserves of commercial banks
 To maintain balance between demand and supply of currency

3. FUNCTIONS OF RBI
Monetary function
 Issue of currency
 Banker to government
 Banker to bank
 Formulate monetary policy
 Manager of foreign reserve
Non-Monetary function
 Collection and publication of data.
 Development role
 Regulations of banking system

4. Monetary function
Issue of Currency
 To ensure adequate quantity of supplies of currency notes andcoins of good
quality.
 Issues new currency and destroys currency and coins not fit for circulation.
 It has to keep in forms of gold and foreign securities as perstatutory rules against
notes & coins issued.
Banker to the Government
Performs all banking function for the central and the state governments and also acts
as their banker excepting that of Jammu and Kashmir. It makes loans and advances
to the States and local authorities. It acts as adviser to the Government on all
monetary and banking matters

5. Banker to banks
• Maintains banking accounts of all scheduled banks.
• RBI also regulates the opening /installation of ATM Freshcurrency notes for ATMs
are supplied by RBI.
• RBI regulates the opening of branches by banks.
• It ensures that all the N.B.F.S follow the Know Your Customer guidelines.
Formulate monetary policy
• Maintain price stability and ensuring adequate flow of creditin the economy.
• It formulates implements and monitors the monetary policy.

6. Manager of Foreign Exchange
• To facilitate external trade and payment and promote orderly development and
maintenance of foreign exchange market in India.
• It acts as a custodian and Manages the Foreign Exchange Management
Act,(FEMA) 1999.
• RBI buys and sells foreign currency to maintain the exchange rate of Indian
Rupee v/s foreign currencies like the US Dollar, Euro, Pound and Japanese yen.

7. Non-Monetary function
Collection and publication of data
The RBI has a separate department of statistics for collecting, compiling and
disseminating statistical information and conducting research related to bank and
other financial sectors of the economy including supply of money, credit banking
operation and foreign exchange.
Developmental Role
 To develop the quality of banking system in India.
 Performs a wide range of promotional functions to support national objectives.
Regulation of Banking System
The RBI Act and the Banking Regulatory Act have both conferred extensive powers
of regulations and supervision to the RBI over commercial and cooperative banks to
check malpractices and protect interests of the investors.