Role and function of RBI RBI was established in April 1935 and was nationalised in the year 1949.the bank was constituted for the need of following : to regulate the issue of bank notes. to maintain minimum reserve for monetary/price stability. to operate the creit and currency system of the country. Functions of RBI 1) Banking functions : - under the section 22 of the RBI act, the bank has a right to issue bank notes. - the RBI is the agent of the central and the state government.The RBI has the obligations for the business transactions of the government i.e. to recieve and make payments on behalf of central and state government and other banking operations. - RBI is the banker's bank.All the banks must maintain the minimum cash balance with RBI.The minimum cash requirement can be changed by RBI time to time. - RBI is the controller of the credit i.e. it has the power to influence the volume of the credit by the nationalized private sector and foreign banks in India.It also include corporate banks to maintain CRR. 2) Supervisory Function - The RBI, a central bank of India,is a regulatory body for all the banks of India.under the RBI act 1934 and banking regulation act of 1949, the RBI has the power to control and regulate commercial and cooperative banks i.e. it is the liscencing authority for establishment,branch expansion liquidity of their assets , management and the methods of working merger and liquidations,reconstruction and various other functions. 3) Promotional Functions - The RBI performs a variety of promotional fuctions i.e. to promote banking habits, extent banking facilities to rural and semi urban areas and to establish new organisations Like IFCI and straight financial corporations, Industrial Development banks of India(1964),Agricultural refinance corporation of India and industrial reconstruction corporation of india.RBI also established agricultural credit and agricultural refinance and development corporations for long term financing.

4)Other Functions - RBi is the administration for foreign exchange management act of 1999 to facilitate external trade payment and to promote the foreign exchange market in India. - The RBI maintain banking accounts of all the registered banks of India. - It is the responsibility of the RBI to maintain the price stability. - To ensure sufficent flow of credit to the productive sectors. - To maintain the public confidence in the banking system by protecting the pedositor's interest. - To provide cost effective banking services to the public. Banking sector reforms The government of india intiated banking sector reforms - To insure capital adequacy. - consolidation of banking system. - restructuring of weak public sector banks. - technological improvement in the banking sectors. - disclosure standards as per the international practices. - scientific tools for the risk management. - Legal reforms to recover NPA's (non performing assets)