Apart from its Monetary policies to combat Inflation, Recession and like issues; Central Bank also has a significant role to play in the development of a country. This brief presentation highlights the roles India's Central Bank - the Reserve Bank of India has to play in the country's development.

1. Role of Reserve Bank of India in
Economic Development
A Macroeconomics for Business Presentation by
Imad Shahid Khan
Section A, 2nd Semester, Bachelor of Business Management (2013-2016)
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2. Preamble
“To regulate the issue of Bank Notes and
keeping of reserves with a view to securing
monetary stability in India and generally to
operate the currency and credit system of the
country to its advantage.”
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3. What is meant
by the RBI’s
role in the
Economic
Development?
This role refers to the
development of the
quality of banking
system in India and
ensuring that credit is
available to the
productive sectors of
the economy.
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4. Roles of RBI in the Indian Economic
Development
Development of Banking System
Development of Financial Institutions
Development of Impoverished Regions
Economic Stability
Economic Growth
Appropriate Interest rate structure
Miscellaneous
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5. Development of Banking System
Granting license to banks.
Inspect and make enquiry or determine position in
respect of matters under various sections of RBI and
Banking Regulation Act.
Periodical review of the work of commercial banks.
Giving directives to commercial banks.
Control the NBFIs.
Ensuring the health of financial system through on-
site and off-site verifications.
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7. Development of Financial Institutions
Reserve Bank of India’s role also includes establishing
institutions designed to build the country’s financial
infrastructure as well as regulate them. Export - Import
Bank of India (Exim Bank); National Bank for
Agriculture and Rural Development (NABARD); Small
Industries Development Bank of India (SIDBI);
National Housing Bank (NHB) are some of them.
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9. Development of Impoverished Regions
The RBI has proactively promoted the initiative
of establishing banking as well as many
financial schemes and infrastructure in the
otherwise ignored regions.
Access to affordable financial services and
promoting financial education and literacy
and inculcating banking habits among the
rural mass.
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11. Economic Stability
 Reserve Bank of India is responsible for the stability of the
economy and combats issues like Inflation, Recession,
Currency devaluation, through various Monetary
policies.
 RBI achieves this using various tools like Bank rate, Rep
Rate, Reverse Repo Rate, CRR, SLR, etc
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13. Appropriate Interest rate structure
 the cost of borrowing is determined by where the Reserve
Bank of India sets its interest rates and ultimately consumer
behaviour will determine how the overall demand in the
economy is.
 So, both through direct channels on money supply as well
as through indirect channels through the interest rate
setting behaviour, the Reserve Bank of India determines
what should be the interest rate that a commercial banks
sets and therefore in that process determine how
consumers actually behave.
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15. Economic Growth
 Traditionally, RBI’s monetary policy was focused on
controlling inflation through contraction of money supply
and credit. This resulted in poor growth performance.
 Thus, RBI have now adopted the policy of ‘Growth with
Stability’. This means sufficient credit will be available for
growing needs of different sectors of economy and at
the same time, inflation will be controlled with in a
certain limit.
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