Role and Functions of RBI
- Formulating and implementing monetary policy: RBI is responsible for formulating and implementing monetary policy to maintain price stability and ensure adequate credit flow to the productive sectors of the economy.
- Regulating and supervising the banking sector: RBI regulates and supervises banks, non-banking financial institutions, and other financial intermediaries to ensure financial stability, protect the interests of depositors, and maintain the soundness of the financial system.
- Issuing currency and managing the payment and settlement systems: RBI is responsible for issuing and managing the currency in circulation and maintaining the stability and efficiency of the payment and settlement systems in the country.
- Managing the foreign exchange reserves: RBI manages the country’s foreign exchange reserves, which are used to intervene in the foreign exchange market to maintain exchange rate stability and ensure external sector stability.
Difference Between NABARD and RBI
The Reserve Bank of India and the National Bank for Agriculture and Rural Development are the most important financial institutions in India. Both organizations play a critical role in the economic development of India. But their primary objectives, functions, and roles are different. RBI and NABARD both of them play an essential role in the banking system of India despite their different purposes. RBI ensures the financial system’s stability and oversees the country’s overall monetary policy On the other hand, NABARD focuses on providing banking support to the rural sector and promoting rural development.
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