Functions of Central Bank:The important functions of Central Banks are as follows:-

1-Sole right of note issueThe Central Bank in every country, now, has the monopoly note issue. The issue of notes is governed by certain regulation which is enforced by the state.2-Banker to the stateA Central Bank acts as a banker to the government. It holds cash balances of the government free of interest.3-Banker's bankThe central bank acts as a banker to the commercial banks.4-Banker's clearing houseThe Central Bank acts as a clearing house for the settlement of mutual obligations of different commercial banks. If a difference exists, it is paid by a cheque drawn on the banks accounts carried at the Central Bank.

5-Lendor to the last resortThe Central Bank helps the member banks in times of crisis.

6-Financial agentThe Central Banks act as financial agents for the government. It is an agent for the government in purchasing and selling of gold and foreign exchange.

7-Effective monetary policyThe aim of the government is to create employment in the country, resist undue inflation and achieve a favorable balance of payment.

8-External functionsThe Central Bank also performs a number of external functions.

Reserve Bank of India is central bank of India. This bank is controlling body of all money and all banks in India. This is bank which is control money flow in India.1)RBI have many weapons to control money flow in India. Interest rates are main from this. briefly discuss here about all rates of RBI that control and regulate money flow in India.

-Repo rate and reverse repo rate - This is rate at which banks take money from RBI and Banks give money to RBI. If any bank in India need money for demand of loan then bank can take money from RBI. But bank have to pay interest rate for this money to RBI. This rate is repo rate. This has influence on money flow in India.

When bank have more money then bank give money to RBI. This money is taken by RBI at certain rate this rate is reverse repo rate. When there is change in both rates then there is effect on money flow in India. This is mechanism initiated through banks.-CRR - This is cash reserve ratio. This ration is defined as amount of money given to RBI. There is mandatory to all banks. Amount of cash is given to RBI according to what amount of cash bank owns. This ratio is called as cash reserve ratio.-SLR - This is ratio at which bank have compulsory to invest in government security. This is restricting all money from bank to go to people and in system. This ration is statutory liquidity ratio.

2)RBI prints money and currency notes according to demand of cash and there is certain limits. This is depends upon gold reserve at country. RBI can not print money in vague amount. There are rules for printing money. If more money is printed then there is problem like inflation will arise.3)RBI is separate body for taking action. This bank is authority. This bank have only control of Finance ministry. Finance ministry can advise bank in many matters.4)RBI changes rate described above and control inflation. Rate of lending and borrowing are main weapons to control money flow in system. If rates of lending and borrowing increased then money from system will automatically goes out of system. Cash reserve ratio is increased then money will go to RBI and not rest in system. This extra money in system is absorbed and inflation is cooled down. This is principle of controlling inflation.

The Reserve Bank of India(RBI), with it's monetary policy and control over money supplyand function of RBI(1)Repo rate : 7.5% and reverse repo rate : 6.5%(2)CRR(Cash reserve ratio) current rate is : 4%(3)SLR(Statutory liquidity ratio) current rate is : 23%(4)SRR(statutory reserve requirement):- it is the amount of money set aside by banks to be placed in their Statutory Reserve Accounts with BNM(bank negara malaysia) with zero interest.These are most affecting factors of money flow.