The role of RBI and how it's policies effect banks and lending in the Indian economy

 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

Why India is considered a very attractive destination for investments by foreign investors- and why at times, it is not.

 

• Economic factors: India has a fast-growing economy, skilled workforce, and large consumer base.
• Investment incentives: Foreign investors receive tax incentives, subsidized rates, and preferential tariffs.
• Labor costs: India has relatively cheaper labor costs and wages.
• Market access: India offers access to a new market with willing buyers.
• Manufacturing hubs: Key manufacturing sites and suppliers are easily accessible from Indian manufacturing hubs.
• Policy regime: India has a transparent open policy regime.
• Reform efforts: India has conducted remarkable reform efforts.

However, India can be less attractive for foreign investment due to issues such as:

• Delays in enforcing contracts
• Cumbersome procedures
• Geopolitical risks

In 2020-21, India's FDI inflow was at its highest ever at USD 81.97 billion, despite the COVID pandemic.

*🗄 TYPES OF ATM ( Automated Teller Machine )*

🖨 White Label ATMs (WLAs): ATMs set up, owned and operated by non-banks (i.e NBFCs) are WLAs. Non-bank ATM operators are authorised under the Payment & Settlement Systems Act, 2007 by RBI.

🖨 Green Label ATMs – ATMs for agricultural transactions.

🖨 Orange label ATMs – ATMs used for share transactions.

🖨 Pink Label ATMs – ATMs that are meant only for women (ease their banking).

🖨 Yellow Label ATMs – ATMs meant for E-commerce facility.

🖨 Brown Label ATMs – ATMs that are outsourced by a bank to a third party (based on the concept of sharing the cost).

🖨 Biometric ATMs – These are ATMs that use security features like fingerprint scanner and eye scanner of the customer to access the bank details.

🖨 Onsite ATMs – ATMs that are located inside the bank’s premises.

🖨 Offsite ATMs- ATMs that are located in various places except inside the bank’s premises.