RBI Functions and Power

What is the RBI?

Each country has a central advisory and regulatory body for all its workings. There are central banks whose rules and regulations fall all other public and private banks for financial systems. This central bank keeps the financial system of the country in check in several ways.

The Reserve Bank of India is our country’s central bank and has several responsibilities. First, it is the bank at the top-most level in the country, and all others must report the same on their workings. Talks of the RBI first came about in 1926 as a body separate from the central government for better control over the country’s money supply. Its official operations began in 1935 and have since evolved with the changing times.

The Organisation of the RBI

All institutions have a hierarchical breakdown of individuals from the top-most levels to the bottom-most, all of which hold a certain level of importance. To explain the organisation power and function of RBI, let’s look at the hierarchical structure of its constituents.

• The Union Government appoints the Central Board of Directors
• There are fourteen members on this board
• The Governor is, in simple words, like the CEO of the apex bank
• Deputy Governors assist the Reserve Bank Governor’s office
• Local Boards from the country’s North, West, East and South regions
• Offices and branches across the country in 27 major cities
• Senior officers head central Office Departments
• There are 27 of these departments
• Other RBI subsidiaries at lower levels, such as National Bank for Agriculture and Rural Development (NABARD)

Power and Functions of RBI

Let’s highlight the power and functions of RBI. While the apex institution holds various responsibilities, its key functions are enlisted.

• Formulating, executing and managing the country’s monetary policy framework to keep inflation, credit and money supply in check
• Issuing currency: the RBI is the only institution that can print money
• It is also responsible for preventing counterfeit money by adopting safety mechanisms in its production
• Banker to the government: the central government uses the central bank as their primary money holder and banker
• Our RBI is the primary banker to the central as well as most state governments
• Banker to other banks: aside from being the banker to the government, the RBI also provides loans and deposit facilities to the public and private bank
• It also facilitates inter-bank money transfers, check-clearing facilities
• Regulation and supervision of:
  • Market operations such as exchanging government bonds and securities and the money market
  • Non-banking financial companies (NBFCs) such as insurance companies, investment banks, development banks, private equity funds
  • Payment systems: computerising these systems and coming up with more efficient methods to improve them
  • Foreign exchange market and management: the Reserve Bank is the chief custodian of India’s foreign exchange reserves
  • It is also responsible for overseeing the country’s foreign exchange market by regulating the exchange rate (only to a limit)
• Economic development: by providing specialised credit for the rural sector via numerous programmes and promoting the development of micro, small and medium enterprises (MSMEs) among other practices
• Research: members of the apex bank are responsible for conducting policy research and disseminating data about the financial system, including how to contemporise its functionality

Conclusion

The Reserve Bank of India carries out several functions in India. Under its various departments, the RBI holds all of the responsibility of being the topmost financial institution in the country. One may avail of a career at the Reserve Bank by applying for the same via their website. A job here is one of the highest official jobs in affiliation with the finance sector’s government.