The Reserve Bank of India (RBI) is India's central bank. It controls the monetary policy of the Indian rupee. The RBI's functions include:
- Regulating and supervising the financial system
- Issuing currency
- Managing the supply of currency
- Managing foreign exchange reserves
- Licensing new banks
- Controlling inflation and recession
- Ensuring financial stability
- Ensuring the orderly development of banking activities
- Ensuring bank liquidity and solvency
The RBI uses quantitative and qualitative methods to control the flow of money in the market. It announces monetary policies at regular intervals.
The RBI's policies affect banks and lending in the Indian economy by:
- Controlling the credit created by commercial banks
- Protecting interest rates
- Providing positive banking alternatives to the public
- Managing foreign exchange reserves
- Licensing new banks
- Controlling inflation and recession
- Ensuring the orderly development of banking activities
- Ensuring bank liquidity and solvency
