Reserve Bank of India

The preamble of the Reserve Bank of India describes the basic functions of the reserve bank as:{{cite web|url=https://www.rbi.org.in/commonperson/English/Scripts/Organisation.aspx|title=Reserve Bank of India|website=www.rbi.org.in|access-date=16 July 2020|archive-date=16 July 2020|archive-url=https://web.archive.org/web/20200716154823/https://www.rbi.org.in/commonperson/English/Scripts/Organisation.aspx|url-status=live}}

{{Blockquote|text=...to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth.|sign=|source=}}

File:Reserve Bank of India 2010 stamp.jpg

The Hilton Young Commission (1928), which laid the groundwork for the Reserve Bank of India Act, 1934, considered Ambedkar’s recommendations. His advocacy for a managed currency system and an independent central bank to regulate credit and control inflation influenced the RBI’s establishment in 1935.

Ambedkar was critical of British colonial financial policies, particularly the instability caused by the silver standard. He proposed a stable monetary framework and emphasized the need for financial inclusion, ensuring equitable access to banking services. His economic principles continue to influence India's financial policies and central banking regulations.

The Reserve Bank of India was established{{cite web|url=https://www.rbi.org.in/commonperson/English/Scripts/Organisation.aspx#EP|title=Reserve Bank of India|website=www.rbi.org.in|access-date=16 July 2020|archive-date=16 July 2020|archive-url=https://web.archive.org/web/20200716154823/https://www.rbi.org.in/commonperson/English/Scripts/Organisation.aspx#EP|url-status=live}} in 1934, under the Reserve Bank of India Act.[http://www.rbi.org.in/scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Act The Reserve Bank of India Act, 1934] {{Webarchive|url=https://web.archive.org/web/20170225181554/https://rbi.org.in/scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Act |date=25 February 2017 }}. rbi.org.in Though privately owned initially, it was nationalised in 1949 and since then fully owned by the Ministry of Finance, Government of India (GoI).

File:IND-19a-Reserve Bank of India-10 Rupees (1937).jpg

The Reserve Bank of India was founded on 1 April 1935 to respond to economic troubles after the First World War.{{cite journal|author=Cecil Kisch |title=Review 'The Monetary Policy of Reserve Bank of India' by Rohit|journal=The Economic Journal|volume= 59|issue=235 |year=1949|pages=436–438|doi=10.2307/2226888|jstor=2226888}} The bank was set up based on the recommendations of the 1926 Royal Commission on Indian Currency and Finance, also known as the Hilton Young Commission.{{Cite web |url=http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RBI290410BC.pdf |title= Reserve Bank of India: Platinum Jubilee (PDF) |archive-url=https://web.archive.org/web/20120510122917/http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RBI290410BC.pdf |date=10 May 2012 |url-status=live |archive-date=10 May 2012}} Eventually, the Central Legislative Assembly passed these guidelines as the RBI Act 1934. India was the first colony to have its own central bank.{{Citation |last1=Eichengreen |first1=Barry |title=Interwar Central Banks: A Tour d' Horizon |date=2023 |url=https://www.cambridge.org/core/books/spread-of-the-modern-central-bank-and-global-cooperation/interwar-central-banks/BD45C3275703D3ED0D56334E0661C207 |work=The Spread of the Modern Central Bank and Global Cooperation: 1919–1939 |pages=3–39 |editor-last=Kakridis |editor-first=Andreas |publisher=Cambridge University Press |doi=10.1017/9781009367578.003 |isbn=978-1-009-36757-8 |last2=Kakridis |first2=Andreas |editor2-last=Eichengreen |editor2-first=Barry|url-access=subscription }}

The original choice for the seal of RBI was the East India Company Double Mohur, with the sketch of the Lion and swimming Tree. However, it was decided to replace the lion with the tiger, the national animal of India. The Preamble of the RBI describes its basic functions to regulate the issue of banknotes, keep reserves to secure monetary stability in India, and generally to operate the currency and credit system in the best interests of the country. The Central Office of the RBI was established in Calcutta (now Kolkata) but was moved to Bombay (now Mumbai) in 1937. The RBI also acted as Burma's (now Myanmar) central bank until April 1947 (except during the years of Japanese occupation (1942–45)), even though Burma seceded from the Indian Union in 1937. After the Partition of India in August 1947, the bank served as the central bank for Pakistan until June 1948 when the State Bank of Pakistan commenced operations. Though set up as a shareholders' bank, the RBI has been fully owned by the Government of India since its nationalisation in 1949.{{cite web |url=http://www.rbi.org.in/scripts/briefhistory.aspx |title=History |publisher=RBI |date=1 April 1935 |access-date=20 August 2010 |archive-date=31 August 2010 |archive-url=https://web.archive.org/web/20100831013657/http://www.rbi.org.in/scripts/briefhistory.aspx |url-status=live }} RBI has a monopoly of note issue.

In the 1950s, the Indian government, under its first Prime Minister Jawaharlal Nehru, developed a centrally planned economic policy that focused on the agricultural sector. The administration nationalised commercial banks{{cite journal|doi=10.2145/20060104|title=India and the Global Economy|journal=Business Economics|volume=41|pages=28–36|year=2006|last1=Wilson|first1=Beth Anne|last2=Keim|first2=Geoffrey N.|s2cid=153335407}} and established, based on the Banking Companies Act, 1949 (later called the Banking Regulation Act), a central bank regulation as part of the RBI. Furthermore, the central bank was ordered to support economic plan with loans.{{cite journal|author1=Jadhav, Narenda|author2=Ray, Partha|author3=Bose, Dhritidyuti|author4=Gupta, Indranil Sen|title=The Reserve Bank of India's Balance Sheet: Analytics and Dynamics of Evolution|year=2003|journal=Reserve Bank of India Occasional Papers|volume=24|issue=3|page=16|url=https://www.rbi.org.in/upload/publications/pdfs/60611.pdf|access-date=26 December 2018|archive-date=9 February 2022|archive-url=https://web.archive.org/web/20220209124846/https://www.rbi.org.in/upload/publications/pdfs/60611.pdf|url-status=live}}

As a result of bank crashes, the RBI was requested to establish and monitor a deposit insurance system. Meant to restore the trust in the national bank system, it was initialized on 7 December 1961. The Indian government founded the funds to promote the economy and used the slogan "Developing Banking". The government of India restructured the national bank market and nationalized a lot of institutes. As a result, the RBI had to play the central part in controlling and supporting this public banking sector.

In 1969, the Indira Gandhi-headed government nationalised 14 major commercial banks. Upon Indira Gandhi's return to power in 1980, a further six banks were nationalised. The regulation of the economy and especially the financial sector was reinforced by the Government of India in the 1970s and 1980s.{{cite journal|doi=10.1023/A:1015260208546|jstor=25074753|title=Corporate Governance Reforms in India|journal=Journal of Business Ethics|volume=37|issue=3|pages=249–268|last1=Reed|first1=Ananya Mukherjee|year=2002|s2cid=150579575}} The central bank became the central player and increased its policies a lot for various tasks like interests, reserve ratio and visible deposits.{{cite journal|doi=10.1007/s12232-008-0057-2|pages=47–84 [47–49]|title=Did efficiency of Indian public sector banks converge with banking reforms?|journal=International Review of Economics|volume=56|year=2009|last1=Kumar|first1=Sunil|last2=Gulati|first2=Rachita|s2cid=154452885}} These measures aimed at better economic development and had a huge effect on the company policy of the institutes. The banks lend money in selected sectors, like agricultural business and small trade companies.{{cite journal|doi=10.2307/2235252|pages=359–374 [360]|jstor=2235252 |title=Financial Development, Economic Growth and Banking Sector Controls: Evidence from India|journal=The Economic Journal|volume=106|issue=435|last1=Demetriades|first1=Panicos O.|last2=Luintel|first2=Kul B.|year=1996}} The Banking Commission was established on Wednesday, 29 January 1969, to analyse banking costs, effects of legislations and banking procedures, including non-banking financial intermediaries and indigenous banking on Government of India economy; with R.G. Saraiya as the chairman.{{cite web | url=https://www.rbi.org.in/scripts/chro_1968.aspx | title=Reserve Bank of India – Chronology of Events | access-date=11 December 2018 | archive-date=11 December 2018 | archive-url=https://web.archive.org/web/20181211010300/https://www.rbi.org.in/scripts/chro_1968.aspx | url-status=live }}{{cite web| url=http://indiabefore91.in/newspapers/banking-commission-announced-i-january-1969| title=Banking Commission Announced I [sic] January 1969| date=27 April 2016| access-date=11 December 2018| archive-date=10 December 2018| archive-url=https://web.archive.org/web/20181210202724/http://indiabefore91.in/newspapers/banking-commission-announced-i-january-1969| url-status=live}}{{cite book|author=Ray, Abhik|title=The evolution of the State Bank of India: The era from 1995 to 1980|url=https://books.google.com/books?id=6sknWQvz3MIC|year=2009|publisher=Penguin Books India|isbn=978-0-670-99906-4|access-date=26 December 2018|archive-date=18 August 2020|archive-url=https://web.archive.org/web/20200818184209/https://books.google.com/books?id=6sknWQvz3MIC|url-status=live}}

The branch was forced to establish two new offices in the country for every newly established office in a town.[http://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/69367.pdf Alpana Killawala: "History of The Reserve Bank of India – Summary", Reserve Bank of India Press Release, 18 March 2006] {{Webarchive|url=https://web.archive.org/web/20110721181440/http://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/69367.pdf |date=21 July 2011 }} (RBI) The oil crises in 1973 resulted in increasing inflation, and the RBI restricted monetary policy to reduce the effects.{{cite journal|author1=Jadhav, Narenda|author2=Ray, Partha|author3=Bose, Dhritidyuti|author4=Gupta, Indranil Sen|title=The Reserve Bank of India's Balance Sheet: Analytics and Dynamics of Evolution|year=2003|journal=Reserve Bank of India Occasional Papers|volume=24|issue=3|page=40|url=https://www.rbi.org.in/upload/publications/pdfs/60611.pdf|access-date=26 December 2018|archive-date=10 August 2017|archive-url=https://web.archive.org/web/20170810164319/https://www.rbi.org.in/upload/publications/pdfs/60611.pdf|url-status=live}}

Many committees analysed the Indian economy between 1985 and 1989. Their results had an effect on the RBI. The Board for Industrial and Financial Reconstruction, the Indira Gandhi Institute of Development Research and the Security & Exchange Board of India investigated the national economy as a whole, and the security and exchange board proposed better methods for more effective markets and the protection of investor interests. The Indian financial market was a leading example for so-called "financial repression" (Mckinnon and Shaw). The Discount and Finance House of India began its operations in the monetary market in April 1988; the National Housing Bank, founded in July 1988, was forced to invest in the property market and a new financial law improved the versatility of direct deposit by more security measures and liberalisation.[http://www.rbi.org.in/scripts/chro_1985.aspx Chronology of Events, Developing the Markets: Seeds of Liberalization- 1985 to 1991] {{Webarchive|url=https://web.archive.org/web/20111115135110/http://www.rbi.org.in/scripts/chro_1985.aspx |date=15 November 2011 }} (RBI)

The national economy contracted in July 1991 as the Indian rupee was devalued.{{cite journal|doi=10.1007/s11205-007-9148-9|page= 410|title= India's Social Development in a Decade of Reforms: 1990–91/1999–2000|journal= Social Indicators Research|volume= 87|issue= 3|year= 2008|last1= Ray|first1= Amal Kanti|s2cid= 153855820}} The currency lost 18% of its value relative to the US dollar, and the Narsimham Committee advised restructuring the financial sector by a temporal reduced reserve ratio as well as the statutory liquidity ratio. New guidelines were published in 1993 to establish a private banking sector. This turning point was meant to reinforce the market and was often called neo-liberal. The central bank deregulated bank interests and some sectors of the financial market like the trust and property markets.{{cite journal|doi=10.1007/s00181-006-0058-5|pages=861–869 [862]|url=https://crawford.anu.edu.au/acde/asarc/pdf/papers/2003/WP2003_03.pdf|title=Structure of Financial Savings During Indian Economic Reforms|journal=Empirical Economics|volume=31|issue=4|year=2006|last1=Jha|first1=Raghbendra|last2=Longjam|first2=Ibotombi S.|hdl=1885/40607|s2cid=54023284|hdl-access=free|access-date=26 December 2018|archive-date=21 September 2017|archive-url=https://web.archive.org/web/20170921234507/https://crawford.anu.edu.au/acde/asarc/pdf/papers/2003/WP2003_03.pdf|url-status=live}} This first phase was a success and the central government forced a diversity liberalisation to diversify owner structures in 1998.

The National Stock Exchange of India took the trade on in June 1994 and the RBI allowed nationalised banks in July to interact with the capital market to reinforce their capital base. The central bank founded a subsidiary company—the Bharatiya Reserve Bank Note Mudran Private Limited—on 3 February 1995 to produce banknotes.[http://www.rbi.org.in/scripts/chro_1991.aspx Chronology of Events, Crisis and Reforms- 1991 to 2000] {{Webarchive|url=https://web.archive.org/web/20100203165408/http://www.rbi.org.in/scripts/chro_1991.aspx |date=3 February 2010 }} (RBI)

The Foreign Exchange Management Act, 1999 came into force in June 2000. It should improve the item in 2004–2005 (National Electronic Fund Transfer).{{cite web |url=http://rbidocs.rbi.org.in/rdocs/opportunities/history.html |title=RBI History – Spanning 7 Decades of Public Service |publisher=Rbidocs.rbi.org.in |date=1 April 1935 |access-date=20 August 2010 |archive-date=24 July 2010 |archive-url=https://web.archive.org/web/20100724065919/http://rbidocs.rbi.org.in/rdocs/opportunities/history.html |url-status=live }} The Security Printing & Minting Corporation of India Ltd., a merger of nine institutions, was founded in 2006 and produces banknotes and coins.[http://www.spmcil.com/aboutus.htm Security Printing &Minting Corporation of India, About Us] {{webarchive|url=https://web.archive.org/web/20100206131349/http://www.spmcil.com/aboutus.htm |date=6 February 2010 }} (SPMCIL)

The national economy's growth rate came down to 5.8% in the last quarter of 2008–2009[http://rbi.org.in/scripts/NotificationUser.aspx?Id=5326&Mode=0 Second Quarter Review of Monetary Policy for the Year 2009–10] {{webarchive|url=https://web.archive.org/web/20100326033926/http://rbi.org.in/scripts/NotificationUser.aspx?Id=5326&Mode=0 |date=26 March 2010 }}, Punkt 15., (RBI) and the central bank promotes the economic development.[http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/MMDSQ261009.pdf Macroeconomic and Monetary Developments – Second Quarter Review 2009–10] {{Webarchive|url=https://web.archive.org/web/20110721181454/http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/MMDSQ261009.pdf |date=21 July 2011 }}. rbi.org.in. p. 94

In 2016, the Government of India amended the RBI Act to establish the Monetary Policy Committee (MPC) to set. This limited the role of the RBI in setting interest rates, as the MPC membership is evenly divided between members of the RBI (including the RBI governor) and independent members appointed by the government. However, in the event of a tie, the vote of the RBI governor is decisive.

The same year, the RBI started issuing a new bond called the Sovereign Gold Bond, on behalf of the Government.{{Cite web |date=2015-01-14 |title=Notification |url=https://egazette.gov.in/WriteReadData/2016/167641.pdf#page=39 |url-status=live |archive-url=https://web.archive.org/web/20240425092840/https://egazette.gov.in/WriteReadData/2016/167641.pdf |archive-date=2024-04-25 |access-date=2024-04-25 |website=The Gazette of India |pages=39–40 |publication-place=New Delhi}} The intent behind the scheme was to reduce gold imports by shifting investments from physical gold into a bond that tracked the price of gold.{{Cite web |last=Sabnavis |first=Madan |date=2023-11-20 |title=India wants gold, not gold bonds |url=https://www.thehindubusinessline.com/opinion/india-wants-gold-not-gold-bonds/article67555394.ece |url-status=live |archive-url=https://web.archive.org/web/20231201061119/https://www.thehindubusinessline.com/opinion/india-wants-gold-not-gold-bonds/article67555394.ece |archive-date=1 December 2023 |access-date=2024-07-26 |website=BusinessLine |language=en}} The bond also carried interest.

In April 2018, the RBI announced that "entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling virtual currencies," including Bitcoin.{{cite web |title=Statement on Developmental and Regulatory Policies |url=https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR264270719E5CB28249D7BCE07C5B3196C904.PDF |website=RBI.org |access-date=5 March 2020 |archive-date=17 January 2020 |archive-url=https://web.archive.org/web/20200117201714/https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR264270719E5CB28249D7BCE07C5B3196C904.PDF |url-status=live }} While the RBI later clarified that it "has not prohibited" virtual currencies,{{cite news |last1=Chandrashekhar |first1=Anandi |title=RBI says crypto not banned, but don't bank on it |url=https://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-says-crypto-not-banned-but-dont-bank-on-it/articleshow/73465030.cms |newspaper=The Economic Times |access-date=5 March 2020 |date=21 January 2020 |archive-date=14 September 2020 |archive-url=https://web.archive.org/web/20200914231019/https://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-says-crypto-not-banned-but-dont-bank-on-it/articleshow/73465030.cms |url-status=live }} a three-judge panel of the Supreme Court of India issued a ruling on 4 March 2020 that the RBI had failed to show "at least some semblance of any damage suffered by its regulated entities" through the handling of virtual currencies to justify its decision.{{cite web |last1=Mohanty |first1=Suchitra |last2=Anand |first2=Nupur |title=India's top court strikes down RBI banking ban on cryptocurrency |url=https://ca.reuters.com/article/technologyNews/idCAKBN20R0KV-OCATC |work=Reuters |access-date=5 March 2020 |date=4 March 2020 |archive-date=7 August 2020 |archive-url=https://web.archive.org/web/20200807030432/https://ca.reuters.com/article/technologyNews/idCAKBN20R0KV-OCATC |url-status=dead }} The court challenge was filed by the Internet and Mobile Association of India, whose members include some cryptocurrency exchanges whose businesses suffered following the RBI's 2018 order.{{cite web |last1=Krishnan |first1=Murali |title=Supreme Court ends RBI's 2018 ban on banks dealing in cryptocurrency |url=https://www.hindustantimes.com/india-news/supreme-court-ends-rbi-s-ban-on-banks-dealing-in-cryptocurrency/story-Q99whSgHNG01oGOX7FyTxN.html |website=Hindustan Times |access-date=5 March 2020 |date=4 March 2020 |archive-date=5 March 2020 |archive-url=https://web.archive.org/web/20200305162605/https://www.hindustantimes.com/india-news/supreme-court-ends-rbi-s-ban-on-banks-dealing-in-cryptocurrency/story-Q99whSgHNG01oGOX7FyTxN.html |url-status=live }}{{cite web|author=Aneesha Mathur |date=4 March 2020 |title=Supreme Court quashes RBI ban on cryptocurrency trade|url=https://www.indiatoday.in/business/story/supreme-court-quashes-rbi-ban-on-cryptocurrency-1652254-2020-03-04|access-date=16 October 2020|website=India Today|language=en|archive-date=30 January 2021|archive-url=https://web.archive.org/web/20210130034029/https://www.indiatoday.in/business/story/supreme-court-quashes-rbi-ban-on-cryptocurrency-1652254-2020-03-04|url-status=live}}{{Cite news|title=SC allows trade in cryptocurrency, quashes RBI curb|work=The Economic Times|url=https://economictimes.indiatimes.com/markets/stocks/news/sc-allows-trade-in-cryptocurrency-quashes-rbi-curb-on-use/articleshow/74470078.cms|access-date=16 October 2020|archive-date=22 October 2020|archive-url=https://web.archive.org/web/20201022045440/https://economictimes.indiatimes.com/markets/stocks/news/sc-allows-trade-in-cryptocurrency-quashes-rbi-curb-on-use/articleshow/74470078.cms|url-status=live}}

File:MonetaryMuseumRBIPlaque.JPG in Mumbai was established by the bank under its educational programme in 2004.]]

The central board of directors is the main committee of the central bank. The Government of India appoints the directors for a four-year term. The board consists of a governor, and not more than four deputy governors; four directors to represent the regional boards;[http://www.rbi.org.in/scripts/AboutusDisplay.aspx Reserve Bank of India – India's Central Bank] {{Webarchive|url=https://web.archive.org/web/20100821190555/http://www.rbi.org.in/scripts/AboutusDisplay.aspx |date=21 August 2010 }}. Rbi.org.in. Retrieved 21 May 2014. two – usually the Economic Affairs Secretary and the Financial Services Secretary – from the Ministry of Finance and ten other directors from various fields. The Reserve Bank – under Raghuram Rajan's governorship – wanted to create a post of a chief operating officer (COO), in the rank of deputy governor and wanted to re-allocate work between the five of them (four deputy governor and COO).{{cite news |title=RBI proposes COO post in rank of Deputy Governor- Business News |url=https://www.businesstoday.in/sectors/banks/raghuram-rajan-rbi-coo-post-in-rank-of-deputy-governor/story/209238.html |access-date=7 April 2021 |work=Business Today |date=14 August 2014 |archive-date=4 August 2018 |archive-url=https://web.archive.org/web/20180804013830/https://www.businesstoday.in/sectors/banks/raghuram-rajan-rbi-coo-post-in-rank-of-deputy-governor/story/209238.html |url-status=live }}{{cite news |title=RBI Proposes COO Post in Rank of Deputy Governor |url=https://www.ndtv.com/business/rbi-proposes-coo-post-in-rank-of-deputy-governor-641728 |access-date=7 April 2021 |work=NDTV |date=14 August 2014 |archive-date=3 August 2018 |archive-url=https://web.archive.org/web/20180803194555/https://www.ndtv.com/business/rbi-proposes-coo-post-in-rank-of-deputy-governor-641728 |url-status=live }}

Two of the four deputy governors are traditionally from RBI ranks and are selected from the bank's executive directors. One is nominated from among the chairpersons of public sector banks and the other is an economist. An Indian Administrative Service officer can also be appointed as deputy governor of RBI and later as the governor of RBI as with the case of Y. Venugopal Reddy and Duvvuri Subbarao. Other persons forming part of the central board of directors of the RBI are Revathi Iyer, Sachin Chaturvedi, Satish Kashinath Marathe, Swaminathan Gurumurthy, Anand Gopal Mahindra, Venu Srinivasan, Pankaj Ramanbhai Patel, Ravindra H. Dholakia, Ajay Seth, and Vivek Joshi.{{citation needed|date=March 2025}}

Executive Directors (ED) consist of M. Rajeshwar Rao, Lily Vadera, Rabi N. Mishra, Smt. Nanda S. Dave, Anil K. Sharma, S. C. Murmu, T. Rabi Sankar, Janak Raj, P Vijayakumar, Indrani Banerjee, O.P. Mall and Sudha Balakrishnan

(Chief Financial Officer).{{cite web|url=https://m.rbi.org.in/commonperson/English/Scripts/OrgStructure.aspx|title=Reserve Bank of India|website=m.rbi.org.in|access-date=25 June 2020|archive-date=6 August 2020|archive-url=https://web.archive.org/web/20200806173730/https://m.rbi.org.in/commonperson/English/Scripts/OrgStructure.aspx|url-status=live}}

Sudha Balakrishnan, a former vice-president at National Securities Depository Limited, assumed charge as the first chief financial officer (CFO) of the Reserve Bank on 15 May 2018; she was given the rank of an executive director.{{Cite news|url=https://economictimes.indiatimes.com/industry/banking/finance/banking/sudha-balakrishnan-appointed-first-cfo-of-reserve-bank-of-india/articleshow/64347979.cms|title=Sudha Balakrishnan appointed first CFO of Reserve Bank of India|last=Rebello|first=Joel|date=28 May 2018|work=The Economic Times|access-date=4 June 2018|archive-date=28 May 2018|archive-url=https://web.archive.org/web/20180528143407/https://economictimes.indiatimes.com/industry/banking/finance/banking/sudha-balakrishnan-appointed-first-cfo-of-reserve-bank-of-india/articleshow/64347979.cms|url-status=live}}

The bank's current governor is Sanjay Malhotra. There are currently four deputy governors Swaminathan J, M. Rajeshwar Rao,{{cite news |date=16 December 2021 |title=Jury is still out: RBI Deputy Governor M Rajeshwar Rao on entry of big biz groups in banking |work=The Indian Express |url=https://indianexpress.com/article/business/india-banking-rbi-deputy-governor-rajeshwar-rao-7675175/ |access-date=3 March 2022 |archive-date=3 March 2022 |archive-url=https://web.archive.org/web/20220303130040/https://indianexpress.com/article/business/india-banking-rbi-deputy-governor-rajeshwar-rao-7675175/ |url-status=live }} Michael Patra{{cite web |last=Nag |first=Anirban |date=14 January 2020 |title=India Appoints Career Central Banker as Deputy Governor |url=https://www.bloomberg.com/news/articles/2020-01-14/india-appoints-career-central-banker-patra-as-deputy-governor |url-status=live |archive-url=https://web.archive.org/web/20200116061557/https://www.bloomberg.com/news/articles/2020-01-14/india-appoints-career-central-banker-patra-as-deputy-governor |archive-date=16 January 2020 |access-date=16 January 2020 |website=Bloomberg News}}{{Cite news |date=14 January 2020 |title=Meet Michael Patra, RBI's new deputy Governor |work=The Economic Times |agency=Press Trust of India |url=https://economictimes.indiatimes.com/industry/banking/finance/banking/meet-michael-patra-rbis-new-deputy-governor/articleshow/73239606.cms |url-status=live |access-date=16 January 2020 |archive-url=https://web.archive.org/web/20200228200750/https://economictimes.indiatimes.com/industry/banking/finance/banking/meet-michael-patra-rbis-new-deputy-governor/articleshow/73239606.cms |archive-date=28 February 2020 |issn=0013-0389 |oclc=61311680}}{{cite web |title=Reserve Bank of India – Deputy Governors |url=https://www.rbi.org.in/scripts/deputygovernors.aspx |url-status=live |archive-url=https://web.archive.org/web/20200516195721/https://www.rbi.org.in/scripts/deputygovernors.aspx |archive-date=16 May 2020 |access-date=19 March 2020 |website=rbi.org.in}} and T. Rabi Shankar.{{cite news |title=government-names-t-rabi-sankar-as-deputy-governor-of-rbi |publisher=economictimes.com |url=https://economictimes.indiatimes.com/news/economy/finance/government-names-t-rabi-sankar-as-deputy-governor-of-rbi/articleshow/82350129.cms |access-date=2 May 2021 |archive-date=27 June 2024 |archive-url=https://web.archive.org/web/20240627045836/https://economictimes.indiatimes.com/news/economy/finance/government-names-t-rabi-sankar-as-deputy-governor-of-rbi/articleshow/82350129.cms |url-status=live }}

|-

|2

|Governor

|1

|Sanjay Malhotra

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|3

|Deputy Governors

|4

|T Rabi Shankar, Swaminathan J, Poonam Gupta and MR Rao.

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|4

|Executive Directors

|Multiple

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|5

|Principal Chief General Managers

|Multiple

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|6

|Chief General Managers

|Multiple

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|7

|General Managers

|Multiple

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|8

|Deputy General Managers

|Multiple

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|9

|Assistant General Managers

|Multiple

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|10

|Managers

|Multiple

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|11

|Assistant Managers

|Multiple

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|12

|Support Staff

|Multiple

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|}

File:RBI-Tower.jpg

File:View of RBI Chennai from suburban train.jpg lines]]

The RBI has four regional representations: North in New Delhi, South in Chennai, East in Kolkata and West in Mumbai. The representations are formed by five members, appointed for four years by the central government and with the advice of the central board of directors serve as a forum for regional banks and to deal with delegated tasks from the Central Board.{{cite web |url=http://www.rbi.org.in/scripts/AboutusDisplay.aspx |title=About us, Organisation and Functions |publisher=RBI |access-date=20 August 2010 |archive-date=21 August 2010 |archive-url=https://web.archive.org/web/20100821190555/http://www.rbi.org.in/scripts/AboutusDisplay.aspx |url-status=live }}

RBI has 31 branches in India. Mostly all are in Capital cities, exceptions are the Nagpur Reserve Bank branch which is actually a Second capital of Maharashtra and the Ahmedabad Reserve Bank branch. Nagpur Reserve Bank was established in 1956, while the Ahmedabad branch was established in 1950.

It has 3 training colleges for its officers, viz. Reserve Bank Staff College Chennai, Reserve Bank of India Academy Mumbai, and Reserve Bank of India College of Agricultural Banking Pune. There are three autonomous institutions run by RBI namely National Institute of Bank Management (NIBM), Indira Gandhi Institute of Development Research (IGIDR), Institute for Development and Research in Banking Technology (IDRBT).{{cite web|url=https://www.rbi.org.in/Scripts/OtherLinks.aspx|title=Reserve Bank of India - Related Links|website=www.rbi.org.in|access-date=10 May 2015|archive-date=18 May 2015|archive-url=https://web.archive.org/web/20150518101441/https://www.rbi.org.in/Scripts/OtherLinks.aspx|url-status=live}} There are also four zonal training centres at Mumbai, Chennai, Kolkata, and New Delhi.

The Board of Financial Supervision (BFS), formed in November 1994, serves as a CCBD committee to control the financial institutions. It has four members, appointed for two years, and takes measures to strength the role of statutory auditors in the financial sector, external monitoring, and internal controlling systems. The Tarapore committee was set up by the Reserve Bank of India under the chairmanship of former RBI deputy governor S. S. Tarapore to "lay the road map" to capital account convertibility. The five-member committee recommended a three-year time frame for complete convertibility by 1999–2000.

On 8 December 2017, Surekha Marandi, executive director (ED) of Reserve Bank of India, said RBI will open an office in the north-eastern state of Arunachal Pradesh.{{cite news|url=https://economictimes.indiatimes.com/news/economy/policy/rbi-to-open-office-in-arunachal-pradesh/articleshow/61985619.cms|title=RBI to open office in Arunachal Pradesh|first=Bikash|last=Singh|date=8 December 2017|newspaper=The Economic Times|access-date=18 July 2018|archive-date=18 July 2018|archive-url=https://web.archive.org/web/20180718144704/https://economictimes.indiatimes.com/news/economy/policy/rbi-to-open-office-in-arunachal-pradesh/articleshow/61985619.cms|url-status=live}}

Indira Gandhi Institute of Development Research is an advanced research institution established by the RBI and a deemed to be university

BRBNM was established by RBI on 3 February 1995 to enable RBI to bridge the gap between maintain, demand and supply of Indian rupee notes in the country.

Deposit Insurance and Credit Guarantee Corporation was established by RBI for the purpose of providing insurance of deposits and guaranteeing of credit facilities to all Indian banks.

It has been set up by RBI to serve its information technology and cybersecurity needs and to improve the cyber resilience of the Indian banking industry.

Indian Financial Technology and Allied Services[https://www.iftas.in/about-us/overview/ Indian Financial Technology and Allied Services] was established by RBI in February 2015, mandated to design, deploy and support IT-related services to all Banks and Financial Institutions in the country and also to the Reserve Bank of India. It manages and operates the Financial messaging platform (SFMS) that comprises Real-Time Gross Settlement and National Electronic Funds Transfer. INFINET is also managed by IFTAS. IFTAS has taken over the Indian FInancial NETwork (INFINET),[https://www.iftas.in/services/infinet/ Indian FInancial NETwork (INFINET)] Structured Financial Messaging System (SFMS) and the Indian Banking Community Cloud (IBCC) from the IDRBT, effective 1 April 2016.

Shaktikanta Das inaugurated the Reserve Bank Innovation Hub (RBIH) on 24 March 2022 in Bengaluru as Section-8 company under Companies Act, 2013, with an initial investment of ₹100 crore to encourage and nurture financial innovation sustainably through an institutional set-up. RBIH meant to create an ecosystem that focuses on promoting access to financial services and products for the low-income groups in India. It will also help bring world class innovation to the financial sector. RBIH is to help in convergence among various stakeholders from BFSI sector, start-up ecosystem, regulators and academia in the financial innovation space.{{cite news |last1=Dayal |first1=Yogesh |title=Inauguration of the Reserve Bank Innovation Hub |url=https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=53458 |access-date=6 November 2022 |publisher=Reserve Bank of India |date=24 March 2022 |archive-date=6 November 2022 |archive-url=https://web.archive.org/web/20221106050624/https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=53458 |url-status=live }}{{cite news |last1=Dayal |first1=Yogesh |title=Reserve Bank Innovation Hub |url=https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50666 |access-date=6 November 2022 |publisher=Reserve Bank of India |date=17 November 2020 |archive-date=6 November 2022 |archive-url=https://web.archive.org/web/20221106050627/https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50666 |url-status=live }} RBIH is working on the blueprint of Digital Rupee.{{Cite web |last=Mishra |first=Ankur |date=2022-02-01 |title=Budget 2022: Digital Rupee to be issued by RBI in FY23 |url=https://www.timesnownews.com/business-economy/budget-2022-digital-rupee-to-be-issued-by-rbi-in-fy23-article-89270275 |access-date=2022-12-15 |website=TimesNow |language=en |archive-date=15 December 2022 |archive-url=https://web.archive.org/web/20221215053143/https://www.timesnownews.com/business-economy/budget-2022-digital-rupee-to-be-issued-by-rbi-in-fy23-article-89270275 |url-status=live }} Through the LF Decentralized Trust, the RBI is utilizing Linux Foundation's projects to build the Digital Rupee.{{Cite web |last=Singh |first=Jagmeet |date=2024-12-11 |title=Linux Foundation sets up India entity to boost open source collaboration |url=https://techcrunch.com/2024/12/11/linux-foundation-sets-up-india-entity-to-boost-open-source-collaboration/ |access-date=2024-12-13 |website=TechCrunch |language=en-US}}

File:Reserve bank of India Headquarters.jpg sculpture depicting "Prosperity through agriculture"{{cite web|url=http://www.rbi.org.in/Commonman/English/History/Scripts/anecdote3.aspx|title=History of Reserve Bank|access-date=24 February 2009|archive-date=20 July 2009|archive-url=https://web.archive.org/web/20090720075950/http://www.rbi.org.in/Commonman/English/History/Scripts/anecdote3.aspx|url-status=live}}]]

File:General Post Office and Reserve Bank of India, Kolkata, India.jpg (left) at Dalhousie Square, Kolkata]]

The central bank of any country executes many functions such as overseeing monetary policy, issuing currency, managing foreign exchange, working as a bank for government and as a banker of scheduled commercial banks. It also works for overall economic growth of the country. The purposes for which the RBI has been established as India’s central bank has been spelt out in the preamble to the RBI Act:{{Cite web |date=2020-08-07 |title=RBI Functions and Working |url=https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RWF15012018_FCD40172EE58946BAA647A765DC942BD5.PDF |url-status=live |archive-url=https://web.archive.org/web/20220121115159/https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RWF15012018_FCD40172EE58946BAA647A765DC942BD5.PDF |archive-date=21 January 2022 |access-date=2022-08-02 |website=Reserve Bank of India}}

i) "to regulate the issue of banknotes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; and

(ii) that it is essential to have a modern monetary policy framework to meet the challenge of an increasingly complex economy and the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth" ...to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.

The primary objective of RBI is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions, and non-banking finance companies.

The board is constituted by co-opting four directors from the Central Board as members for a term of two years and is chaired by the governor. The deputy governors of the reserve bank are ex-officio members. One deputy governor, usually the deputy governor in charge of banking regulation and supervision, is nominated as the vice-chairman of the board. The board is required to meet normally once every month. It considers inspection reports and other supervisory issues placed before it by the supervisory departments.

Board for Financial Supervision (BFS) through the Audit Sub-Committee also aims at upgrading the quality of the statutory audit and internal audit functions in banks and financial institutions. The audit sub-committee includes deputy governor as the chairman and two directors of the Central Board as members. The BFS oversees the functioning of the Department of Banking Supervision (DBS), the Department of Non-Banking Supervision (DNBS) and the Financial Institutions Division (FID) and gives directions on the regulatory and supervisory issues.

{{Financial risk types}}

As a regulator and supervisor of the Indian banking system it ensures financial stability and public confidence in the banking system. It prescribes broad parameters of banking operations within which the country's banking and financial system functions. Its objectives are to maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public. The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective addressing of complaints by bank customers. The RBI controls the monetary supply, monitors economic indicators like the gross domestic product and has to decide the design of the rupee banknotes as well as coins.[http://www.rbi.org.in/scripts/FAQView.aspx?Id=39 RBI, Frequently Asked Questions, Currency Matters] {{webarchive|url=https://web.archive.org/web/20120112123135/http://www.rbi.org.in/scripts/FAQView.aspx?Id=39 |date=12 January 2012 }} (RBI) RBI uses methods like on-site inspections, off-site surveillance, scrutiny and periodic meetings to supervise new bank licences, setting capital requirements and regulating interest rates in specific areas. RBI is currently focused on implementing norms.

Payment and settlement systems play an important role in improving overall economic efficiency. The Payment and Settlement Systems Act of 2007 (PSS Act)[http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/86706.pdf The Payment and Settlement Systems Act, 2007] {{Webarchive|url=https://web.archive.org/web/20150301114355/http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/86706.pdf |date=1 March 2015 }}. rbi.org.in gives the Reserve Bank oversight authority, including regulation and supervision, for the payment and settlement systems in the country. In this role, the RBI focuses on the development and functioning of safe, secure and efficient payment and settlement mechanisms. Two payment systems National Electronic Fund Transfer (NEFT) and Real-Time Gross Settlement (RTGS) allow individuals, companies and firms to transfer funds from one bank to another. These facilities can only be used for transferring money within the country.

From 16 December 2019, one can transfer money online using the National Electronic Funds Transfer (NEFT) route 24x7, i.e., any time of the day and any day of the week. The Reserve Bank of India stated earlier in December 2019 that bank customers will be able to transfer funds through NEFT around the clock on all days including weekends and holidays from 16 December.{{Cite news|last=Motiani|first=Preeti|title=Transfer money via NEFT 24x7 from Dec 16, 2019; from Jan 1 it will be free of cost.|work=The Economic Times|url=https://economictimes.indiatimes.com/wealth/save/transfer-money-via-neft-24x7-from-today-from-jan-1-it-will-be-free-of-cost-heres-all-you-need-to-know/articleshow/72742169.cms|access-date=5 June 2021|archive-date=5 June 2021|archive-url=https://web.archive.org/web/20210605183601/https://economictimes.indiatimes.com/wealth/save/transfer-money-via-neft-24x7-from-today-from-jan-1-it-will-be-free-of-cost-heres-all-you-need-to-know/articleshow/72742169.cms|url-status=live}} In RTGS, transactions are processed continuously 24x7.[http://www.rbi.org.in/scripts/FAQView.aspx?Id=65 Frequently Asked Questions] {{Webarchive|url=https://web.archive.org/web/20110902131944/http://www.rbi.org.in/scripts/FAQView.aspx?Id=65 |date=2 September 2011 }}. rbi.org.in (10 December 2018)

Just as individuals need a bank to carry out their financial transactions effectively and efficiently, governments also need a bank to carry out their financial transactions. The RBI serves this purpose for the Government of India (GoI). The RBI is also a banker to the government and performs merchant banking function for the central and the state governments. As a banker to the Government of India, the RBI maintains its accounts, receive payments into and make payments out of these accounts. The RBI also helps the GoI to raise money from the public via issuing bonds and government-approved securities. In September 2019, a decision at RBI directors meet was taken to change the RBI financial accounting year to March–April to align itself with the central government calendar instead of the current June–July year.{{Cite news|url=https://www.business-standard.com/article/finance/after-nearly-8-decades-rbi-to-change-its-accounting-year-to-april-march-119082700038_1.html|title=After nearly 8 decades, RBI to change its accounting year to April–March|last=Jha|first=Somesh|date=27 August 2019|work=Business Standard India|access-date=3 September 2019|archive-date=3 September 2019|archive-url=https://web.archive.org/web/20190903115908/https://www.business-standard.com/article/finance/after-nearly-8-decades-rbi-to-change-its-accounting-year-to-april-march-119082700038_1.html|url-status=live}}

RBI issue taxable bonds for investments. From 1 July 2020, RBI is offering Floating Rate Savings Bonds, 2020 (Taxable) – FRSB 2020 (T). The interest on the bonds is payable semi-annually on 1 January and 1 July every year. The coupon on 1 January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months, the first reset being on 1 January 2021. There is no option to pay interest on cumulative basis.{{cite web|title=Reserve Bank of India - Press Releases|url=https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=50009|access-date=4 July 2020|website=www.rbi.org.in|archive-date=4 July 2020|archive-url=https://web.archive.org/web/20200704082302/https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=50009|url-status=live}}

The central bank manages to reach different goals of the Foreign Exchange Management Act, 1999. Their objective is to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

With the increasing integration of the Indian economy with the global economy arising from greater trade and capital flows, the foreign exchange market has evolved as a key segment of the Indian financial market and the RBI has an important role to play in regulating and managing this segment. The RBI manages forex and gold reserves of the nation.

On a given day, the foreign exchange rate reflects the demand for and supply of foreign exchange arising from trade and capital transactions. The RBI's Financial Markets Department (FMD) participates in the foreign exchange market by undertaking sales/purchases of foreign currency to ease volatility in periods of excess demand for/supply of foreign currency.

Other than the Government of India, the Reserve Bank of India is the sole body authorised to issue banknotes in India.

The bank also destroys banknotes when they are not fit for circulation. All the money issued by the central bank is its monetary liability, i.e., the central bank is obliged to back the currency with assets of equal value, to enhance public confidence in paper currency. The objectives are to issue banknotes and give the public adequate supply of the same, to maintain the currency and credit system of the country to utilise it in its best advantage, and to maintain the reserves.

The RBI maintains the economic structure of the country so that it can achieve the objective of price stability as well as economic development because both objectives are diverse in themselves.

For the printing of notes, RBI uses four facilities:{{cite web|url=http://rbidocs.rbi.org.in/rdocs/Content/PDFs/FUNCWWE080910.pdf|title=RBI, Right To Information Doc, Pg 29/30|access-date=17 April 2014|archive-date=4 June 2012|archive-url=https://web.archive.org/web/20120604133548/http://rbidocs.rbi.org.in/rdocs/Content/PDFs/FUNCWWE080910.pdf|url-status=live}}

• The Security Printing and Minting Corporation of India Limited (SPMCIL), a wholly owned company of the Government of India, has printing presses at Nashik, Maharashtra and Dewas, Madhya Pradesh.
• The Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), owned by the RBI, has printing facilities in Mysore, Karnataka and Salboni, West Bengal.

For the minting of coins, SPMCIL has four mints at Mumbai, Noida, Kolkata and Hyderabad for coin production.

Whilst coins are minted by, and {{INR}}1 notes are issued by the Government of India (GoI), the RBI works as an agent of GoI for the distribution and handling of coins. RBI also works to prevent counterfeiting of currency by regularly upgrading security features of currency.

The RBI is authorised to issue notes with face values of up to {{INR}}10,000 and coins up to {{INR}}1,000 rupees.

New {{INR}}500 and {{INR}}2,000 notes were issued on 8 November 2016. The old series of {{INR}}1,000 and {{INR}}500 notes were banned on 8 November 2016, and are no longer in use.

Earlier {{INR}}1,000 notes have been discarded by the RBI.

On 19 May 2023 the Reserve Bank of India announced the discontinuation of the Rs 2,000 denomination banknotes from circulation.

This decision follows the cessation of its printing in 2018-19 due to the ample availability of other denominations and the note's limited use in transactions. This move aligns with the RBI's "Clean Note Policy," addressing the notes nearing the end of their lifespan and maintaining currency efficiency.{{Cite web |last=BUREAU |first=BL MUMBAI |title=RBI on ₹2000 withdrawal: Total value of banknotes in circulation declined to ₹8,470 crore by Feb-end |url=https://www.thehindubusinessline.com/money-and-banking/rbi-on-2000-withdrawal-total-value-of-banknotes-in-circulation-declined-to-8470-crore-by-feb-end/article67903032.ece |url-status=live |website=Business Line |date=March 2024 |access-date=26 March 2024 |archive-date=26 March 2024 |archive-url=https://web.archive.org/web/20240326075702/https://www.thehindubusinessline.com/money-and-banking/rbi-on-2000-withdrawal-total-value-of-banknotes-in-circulation-declined-to-8470-crore-by-feb-end/article67903032.ece }}

File:Nagpur Reserve Bank.JPG branch holds most of India's gold deposits.{{cite web | url=https://www.rbi.org.in/regionalbranch/nagpur/profile.aspx | title=Reserve Bank of India – Nagpur – Profile | access-date=11 December 2018 | archive-date=11 December 2018 | archive-url=https://web.archive.org/web/20181211010244/https://www.rbi.org.in/regionalbranch/nagpur/profile.aspx | url-status=live }}{{cite web | url=https://www.rbi.org.in/regionalbranch/nagpur/nagpur.aspx | title=Reserve Bank of India – Nagpur | access-date=11 December 2018 | archive-date=15 December 2018 | archive-url=https://web.archive.org/web/20181215222253/https://www.rbi.org.in/regionalbranch/nagpur/nagpur.aspx | url-status=live }}{{cite web | url=https://www.rbi.org.in/scripts/AnnualReportPublications.aspx?Id=1239 | title=Reserve Bank of India – Annual Report | access-date=11 December 2018 | archive-date=25 July 2019 | archive-url=https://web.archive.org/web/20190725163034/https://rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1239 | url-status=live }}{{cite web| url=https://www.nagpurtoday.in/old-gold-lying-in-nagpur-may-boost-forex-as-rbi-plans-to-swap-the-metal-with-purer-stuff/07022015| title=Old gold lying in Nagpur may boost forex as RBI plans to swap the metal with purer stuff| date=2 July 2014| access-date=11 December 2018| archive-date=30 March 2019| archive-url=https://web.archive.org/web/20190330210430/https://www.nagpurtoday.in/old-gold-lying-in-nagpur-may-boost-forex-as-rbi-plans-to-swap-the-metal-with-purer-stuff/07022015| url-status=live}}]]

Reserve Bank of India also works as a central bank where commercial banks are account holders and can deposit money. RBI maintains banking accounts of all scheduled banks.{{cite web|url=http://www.rbi.org.in/|title=Reserve Bank of India – India's Central Bank|work=rbi.org.in|access-date=8 February 2004|archive-date=19 December 2010|archive-url=https://web.archive.org/web/20101219113959/http://rbi.org.in/|url-status=live}} Commercial banks create credit. It is the duty of the RBI to control the credit through the CRR, repo rate, and open market operations. As the bankers' bank, the RBI facilitates the clearing of cheques between the commercial banks and helps the inter-bank transfer of funds. It can grant financial accommodation to schedule banks. It acts as the lender of the last resort by providing emergency advances to the banks.

{{Main|Fake Indian currency note}}

{{cite news | url=http://timesofindia.indiatimes.com/business/india-business/RBI-launches-website-to-explain-detection-of-fake-currency/articleshow/14742791.cms | title=RBI launches website to explain detection of fake currency | date=8 July 2012 | work=The Times of India | access-date=8 July 2012 | archive-date=8 July 2012 | archive-url=https://web.archive.org/web/20120708095738/http://timesofindia.indiatimes.com/business/india-business/RBI-launches-website-to-explain-detection-of-fake-currency/articleshow/14742791.cms | url-status=live }}

On 22 January 2014; RBI gave a press release stating that after 31 March 2014, it will completely withdraw from circulation of all banknotes issued prior to 2005. From 1 April 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication. The reserve bank has also clarified that the notes issued before 2005 will continue to be legal tender. This would mean that banks are required to exchange the notes for their customers as well as for non-customers. After 1 July 2014, to exchange more than 15 pieces of '500 and '1000 notes, non-customers must furnish proof of identity and residence as well as show aadhar to the bank branch in order to exchange the notes.

This move from the reserve bank is expected to unearth black money held in cash. As the new currency notes have added increased security features, they would help in curbing the menace of fake currency.{{cite web|url=http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30458|title=Reserve Bank of India|work=rbi.org.in|access-date=22 January 2014|archive-date=29 January 2014|archive-url=https://web.archive.org/web/20140129134817/http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30458|url-status=live}}

The central bank has to perform a wide range of promotional functions to support national objectives and industries. The RBI faces a lot of inter-sectoral and local inflation-related problems. Some of these problems are results of the dominant part of the public sector.{{cite journal|doi=10.1007/s00181-007-0123-8|title=Price convergence across regions in India|journal=Empirical Economics|volume=34|issue=2|pages=299–313|year=2008|last1=Das|first1=Samarjit|last2=Bhattacharya|first2=Kaushik|hdl=10419/22907|s2cid=6211348|hdl-access=free}}

Key tools in this effort include Priority Sector Lending such as agriculture, micro and small enterprises (MSE), housing and education. RBI work towards strengthening and supporting small local banks and encourage banks to open branches in rural areas to include large section of society in banking net.

The Reserve Bank has custody of the country's reserves of international currency, and this enables the Reserve Bank to deal with crisis connected with adverse balance of payments position.

Public Debt Office (PDO) acts as CSD (Central Securities Depository) for G-Sec.

With LIBOR cessation in 2021, RBI is set to replace MIFOR with a new benchmark. MIFOR has LIBOR as one of the components and used in interest rate swap (IRS) markets.

File:2016 Indian currency note demonetisation.jpg in Mehsana, Gujarat to withdraw cash following deposit of demonetised currency notes in bank on 15 November 2016.]]

{{Main|2016 Indian banknote demonetisation}}

On 8 November 2016, the Government of India announced the demonetisation of all {{INR}} 500 and {{INR}} 1,000 banknotes of the Mahatma Gandhi Series despite being warned by the Reserve Bank of India (RBI).{{cite web |author=PTI |url=https://www.livemint.com/industry/banking/rbi-warned-of-demonetisation-impact-on-indian-economy-no-effect-on-black-money-1552309636104.html |title=RBI warned of demonetisation impact on Indian economy, no effect on black money |publisher=Livemint.com |date= 11 March 2019|access-date=9 February 2022 |archive-date=11 October 2021 |archive-url=https://web.archive.org/web/20211011062535/https://www.livemint.com/industry/banking/rbi-warned-of-demonetisation-impact-on-indian-economy-no-effect-on-black-money-1552309636104.html |url-status=live }}{{cite web|url=https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38520|title=Withdrawal of Legal Tender Status for ₹ 500 and ₹ 1000 Notes: RBI Notice (Revised)|date=8 November 2016|publisher=Reserve Bank of India|access-date=8 November 2016|archive-date=16 November 2020|archive-url=https://web.archive.org/web/20201116214504/https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38520|url-status=live}} The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.{{cite web|url=http://indiatoday.intoday.in/story/live-pm-narendra-modi-addresses-nation/1/805755.html|title=Here is what PM Modi said about the new Rs 500, Rs 2000 notes and black money|date=8 November 2016|access-date=9 November 2016|work=India Today|archive-date=8 November 2016|archive-url=https://web.archive.org/web/20161108230421/http://indiatoday.intoday.in/story/live-pm-narendra-modi-addresses-nation/1/805755.html|url-status=live}}{{cite web|url=http://timesofindia.indiatimes.com/india/Rs-500-and-Rs-1000-notes-pulled-out-of-circulation-immediately-PM-Narendra-Modi/articleshow/55315473.cms|title=Notes out of circulation|date=8 November 2016|work=The Times of India|access-date=13 February 2021|archive-date=8 November 2020|archive-url=https://web.archive.org/web/20201108161430/https://timesofindia.indiatimes.com/india/Rs-500-and-Rs-1000-notes-pulled-out-of-circulation-immediately-PM-Narendra-Modi/articleshow/55315473.cms|url-status=live}}

File:People gathered at SBI ATM in Paravur near Kollam city in Kerala due to Indian currency demonetisation, Nov 2016.jpg ATM at Paravur near the city of Kollam in Kerala, 19 November 2016]]

The Reserve Bank of India laid down a detailed procedure for the exchange of the demonetised banknotes with new {{INR}} 500 and {{INR}} 2,000 banknotes of the Mahatma Gandhi New Series and {{INR}} 100 banknotes of the preceding Mahatma Gandhi Series. The key points were:

• Citizens had until 30 December 2016 to tender their old banknotes at any office of the RBI or any bank branch and credit the value into their respective bank accounts.
• Cash withdrawals from bank accounts were restricted to {{INRConvert|10000}} per day and {{INRConvert|20000}} per week per account from 10 to 13 November 2016. This limit was increased to {{INRConvert|24000}} per week from 14 November.{{cite web|url=http://finmin.nic.in/press_room/2016/MoF_reviewed_availability_distribution_Notes.pdf|title=Finance Ministry has reviewed the position regarding availability and distribution of all denominations of bank notes|website=Ministry of Finance, Government of India|access-date=13 November 2016|url-status=dead|archive-url=https://web.archive.org/web/20161114012438/http://finmin.nic.in/press_room/2016/MoF_reviewed_availability_distribution_Notes.pdf|archive-date=14 November 2016}}{{cite web|url=https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10706&Mode=0|title=Withdrawal of Legal Tender Character of existing ₹ 500/- and ₹ 1000/- Bank Notes – Revision in limits|publisher=Reserve Bank of India|access-date=13 November 2016|archive-date=5 January 2021|archive-url=https://web.archive.org/web/20210105205543/https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10706&Mode=0|url-status=live}}
• For immediate cash needs, the old banknotes could be exchanged for the new ₹500 and ₹2,000 banknotes as well as ₹100 banknotes over the counter of bank branches by filling up a requisition form along with a valid ID proof. It was announced that this facility would be available until 30 December 2016.
• Initially, the limit was fixed at {{INRConvert|4000}} per person from 8 to 13 November 2016.
• This limit was increased to {{INRConvert|4500}} per person from 14 to 17 November 2016.
• The limit was reduced to {{INRConvert|2000}} per person from 18 November 2016.{{cite web|url=http://finmin.nic.in/press_room/2016/Govt_decisions_on_oldNotes17112016.pdf|title=The Central Government takes several decisions to facilitate farmers, small traders, Group 'C' Employees of Central Government including equivalent levels in the Defence and Para Military Forces, Railways and Central Public Sector Enterprises in the aftermath of the cancellation of the legal tender character of the old Rs. 500 and Rs. 1000 notes; Also decides to reduce the limit of exchange of old Rs. 500/- and Rs. 1000/- notes across the counter in banks from Rs. 4500/- to Rs. 2000/-with effect from 18th November, 2016.|website=Ministry of Finance, Government of India|access-date=17 November 2016|url-status=dead|archive-url=https://web.archive.org/web/20161117213433/http://finmin.nic.in/press_room/2016/Govt_decisions_on_oldNotes17112016.pdf|archive-date=17 November 2016}}
• All exchange of banknotes was abruptly stopped from 25 November 2016.{{cite web|url=https://indianexpress.com/article/india/india-news-india/pm-modi-said-exchange-limit-to-be-hiked-after-november-24-exchange-stopped-4393985/|title=All note exchange stopped from today, PM Modi goes back on promise of hike after November 24|first=Sunny|last=Verma|newspaper=The Indian Express|date=25 November 2016|access-date=5 June 2020|archive-date=5 June 2020|archive-url=https://web.archive.org/web/20200605173017/https://indianexpress.com/article/india/india-news-india/pm-modi-said-exchange-limit-to-be-hiked-after-november-24-exchange-stopped-4393985/|url-status=live}}
• Initially, all ATMs were dispensing banknotes of only {{INR}} 50 and ₹100 denominations and cash withdrawals from ATMs were restricted to {{INRConvert|2000}} per day.{{cite web|title=ATMs –Non-dispensing of Old High Denomination Notes – Closure of operations|url=https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10683&Mode=0|publisher=Reserve Bank of India|access-date=8 November 2016|date=8 November 2016|archive-date=5 January 2021|archive-url=https://web.archive.org/web/20210105205547/https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10683&Mode=0|url-status=live}} From 14 November onwards, ATMs were recalibrated to dispense new ₹500 and ₹2,000 notes and to allow a maximum withdrawal of {{INRConvert|2500}} per day, while other ATMs dispensing banknotes of only ₹50 and ₹100 denominations will allow a maximum withdrawal of {{INRConvert|2000}} per day.

However, exceptions were given to petrol, CNG and gas stations, government hospitals, railway and airline booking counters, state-government recognised dairies and ration stores, and crematoriums to accept the old ₹500 and ₹1,000 banknotes until 11 November 2016, which was later extended to 14 November 2016 and once again to 24 November 2016.{{cite news|title=Govt extends old notes exemption deadline to midnight Nov 24|url=http://www.thehindu.com/news/national/demonetisation-move-secretary-economic-affairs-shaktikanta-das-press-conference-in-new-delhi/article9343621.ece|access-date=14 November 2016|work=The Hindu|archive-date=18 November 2016|archive-url=https://web.archive.org/web/20161118154728/http://www.thehindu.com/news/national/demonetisation-move-secretary-economic-affairs-shaktikanta-das-press-conference-in-new-delhi/article9343621.ece|url-status=live}}{{cite web|title=FAQs on Withdrawal of Legal Tender Character of the existing Bank Notes in the denominations of ₹ 500/- and ₹ 1000/-|url=https://www.rbi.org.in/Scripts/FAQView.aspx?Id=119|publisher=Reserve Bank of India|access-date=13 November 2016|archive-date=13 November 2016|archive-url=https://web.archive.org/web/20161113180038/https://www.rbi.org.in/Scripts/FAQView.aspx?Id=119|url-status=live}} International airports were also instructed to facilitate an exchange of notes amounting to a total value of {{INRConvert|5000}} for foreign tourists and outbound passengers.{{cite news | url=http://economictimes.indiatimes.com/news/economy/policy/outlets-that-will-accept-rs-1000-and-rs-500-notes-in-next-72-hours/articleshow/55317768.cms | title=Outlets that will accept Rs 1,000 and Rs 500 notes in next 72 hours | newspaper=The Economic Times | date=8 November 2016 | access-date=9 November 2016 | archive-date=25 December 2018 | archive-url=https://web.archive.org/web/20181225050125/https://economictimes.indiatimes.com/news/economy/policy/outlets-that-will-accept-rs-1000-and-rs-500-notes-in-next-72-hours/articleshow/55317768.cms%20 | url-status=live }}

Under the revised guidelines issued on 17 November 2016, families were allowed to withdraw {{INRConvert|250000}} for wedding expenses from one account provided it was KYC compliant. The rules were also changed for farmers who are permitted to withdraw {{INRConvert|25000}} per week from their accounts against crop loan.{{cite web|url=http://indiatoday.intoday.in/story/demonetisation-weddings-shaktikanta-das-government-economic-affairs-secretary/1/812730.html|title=Demonetisation rule modified, families can withdraw Rs 2.5 lakh for weddings from one account|work=India Today|date=17 November 2016|access-date=17 November 2016|archive-date=9 December 2017|archive-url=https://web.archive.org/web/20171209200913/http://indiatoday.intoday.in/story/demonetisation-weddings-shaktikanta-das-government-economic-affairs-secretary/1/812730.html|url-status=live}}

File:Queue at ATM for INR 100 Notes - Howrah 2016-11-08 1773.JPG's ATM for {{INR}}100 banknotes in Howrah, on 8 November 2016, 22:23 (IST)|left]]

File:Queue at Bank to Exchange INR 500 and 1000 Notes - Salt Lake City - Kolkata 2016-11-10 02103.jpg to deposit and exchange old {{INR}}500 and {{INR}}1,000 banknotes in Kolkata on 10 November 2016]]

The scarcity of cash due to demonetisation led to chaos, and most people holding old banknotes faced difficulties exchanging them due to endless lines outside banks and ATMs across India, which became a daily routine for millions of people waiting to deposit or exchange the {{INR}}500 and {{INR}}1,000 banknotes since 9 November.{{cite web|url=http://www.aljazeera.com/news/2016/11/india-demonetisation-chaos-atms-run-dry-161109061403011.html|title=India demonetisation: Chaos as ATMs run dry|publisher=Al Jazeera|access-date=9 November 2016|archive-date=10 November 2016|archive-url=https://web.archive.org/web/20161110164223/http://www.aljazeera.com/news/2016/11/india-demonetisation-chaos-atms-run-dry-161109061403011.html|url-status=live}}{{cite web|url=http://indianexpress.com/article/india/india-news-india/demonetisation-chaos-grows-queues-get-longer-at-banks-atms-on-weekend-4371373/|title=Demonetisation: Chaos grows, queues get longer at banks, ATMs on weekend|date=12 November 2016|access-date=21 July 2018|archive-date=4 February 2017|archive-url=https://web.archive.org/web/20170204213631/http://indianexpress.com/article/india/india-news-india/demonetisation-chaos-grows-queues-get-longer-at-banks-atms-on-weekend-4371373/|url-status=live}}{{cite web|url=http://www.aljazeera.com/news/2016/11/india-demonetisation-takes-toll-poor-161116172745225.html|title=India: Demonetisation takes its toll on the poor|date=16 November 2016|publisher=Al Jazeera|access-date=17 November 2016|archive-date=17 November 2016|archive-url=https://web.archive.org/web/20161117012410/http://www.aljazeera.com/news/2016/11/india-demonetisation-takes-toll-poor-161116172745225.html|url-status=live}} ATMs were running out of cash after a few hours of being functional, and around half the ATMs in the country were non-functional. Sporadic violence was reported in New Delhi, but there were no reports of any grievous injury,{{cite web|url=https://www.newindianexpress.com/cities/delhi/2016/nov/13/demonetisation-sporadic-violence-in-delhi-cops-receive-45k-calls-1538063.html|title=Demonetisation: Sporadic violence in Delhi, cops receive 4.5K calls|work=The New Indian Express|date=13 November 2016 |access-date=21 July 2018|archive-date=5 January 2021|archive-url=https://web.archive.org/web/20210105210142/https://www.newindianexpress.com/cities/delhi/2016/nov/13/demonetisation-sporadic-violence-in-delhi-cops-receive-45k-calls-1538063.html|url-status=live}} people attacked bank premises and ATMs,{{cite news|url=http://timesofindia.indiatimes.com/city/bareilly/Unrest-erupts-in-UP-towns-as-cashless-crowds-vent-ire-on-bank-staff/articleshow/55528509.cms|title=Unrest erupts in UP towns as cashless crowds vent ire on bank staff|website=The Times of India|date=20 November 2016 |access-date=24 November 2016|archive-date=14 December 2019|archive-url=https://web.archive.org/web/20191214114014/https://timesofindia.indiatimes.com/city/bareilly/Unrest-erupts-in-UP-towns-as-cashless-crowds-vent-ire-on-bank-staff/articleshow/55528509.cms|url-status=live}}{{cite web|url=http://www.india.com/news/india/demonetisation-effect-atm-vandalism-on-rise-1652843/|title=Demonetisation effect: ATM vandalism on rise|date=18 November 2016|access-date=24 November 2016|archive-date=5 January 2021|archive-url=https://web.archive.org/web/20210105210147/https://www.india.com/news/india/demonetisation-effect-atm-vandalism-on-rise-1652843/|url-status=live}}{{cite news|url=http://www.thehindu.com/news/cities/Kochi/no-cash-frustrated-man-smashes-atm-glass-wall/article9340047.ece|title=No cash: 'frustrated' man smashes ATM glass wall|date=13 November 2016|newspaper=The Hindu|access-date=21 July 2018|archive-date=9 February 2022|archive-url=https://web.archive.org/web/20220209124829/https://www.thehindu.com/news/cities/Kochi/No-cash-%E2%80%98frustrated%E2%80%99-man-smashes-ATM-glass-wall/article16444404.ece|url-status=live}} and a ration shop was looted in Madhya Pradesh after the shop owner refused to accept {{INR}}500 banknotes.{{cite web|url=http://www.hindustantimes.com/bhopal/villagers-loot-pds-shop-over-invalid-after-dealer-refuses-scrapped-banknotes/story-pHFaVKqlz28OETJfvONS1M.html|title=Villagers loot fair price shop after dealer refuses scrapped banknotes|date=12 November 2016|work=Hindustan Times|access-date=21 July 2018|archive-date=12 November 2020|archive-url=https://web.archive.org/web/20201112203454/https://www.hindustantimes.com/bhopal/villagers-loot-pds-shop-over-invalid-after-dealer-refuses-scrapped-banknotes/story-pHFaVKqlz28OETJfvONS1M.html|url-status=live}}[http://www.telegraphindia.com/1161113/jsp/nation/story_118946.jsp Nerves snap in long cash wait, shop looted] {{Webarchive|url=https://web.archive.org/web/20180722041238/https://www.telegraphindia.com/1161113/jsp/nation/story_118946.jsp |date=22 July 2018 }}. The Telegraph (Calcutta) (13 November 2016). Retrieved 26 December 2018.[http://www.news18.com/news/india/demonetisation-fallout-cashless-villagers-loot-pds-shop-in-mps-chhatarpur-village-1311252.html Demonetisation Fallout: Cashless Villagers Loot PDS Shop in MP's Chhatarpur Village] {{Webarchive|url=https://web.archive.org/web/20210105210230/https://www.news18.com/news/india/demonetisation-fallout-cashless-villagers-loot-pds-shop-in-mps-chhatarpur-village-1311252.html |date=5 January 2021 }}. News18.com (21 December 2018). Retrieved 26 December 2018.

• It gave the country a ₹5 trillion advantage as there was a huge spike in country's tax base and addition of 100,000 more pan card holders.{{cite web|url=https://www.indiatoday.in/mail-today/story/narendra-modi-demonetisation-income-tax-revenue-digital-economy-979063-2017-05-24|title=PM Narendra Modi's demonetisation move gave economy Rs 5 lakh crore advantage|date=25 May 2017|access-date=6 June 2020|archive-date=17 May 2020|archive-url=https://web.archive.org/web/20200517230215/https://www.indiatoday.in/amp/mail-today/story/narendra-modi-demonetisation-income-tax-revenue-digital-economy-979063-2017-05-25|url-status=live}}
• There was a very big spike in digital transaction even small town and cities people adopted paying digitally for goods and services leading to sustained growth of non-cash payments.{{cite news|url=https://economictimes.indiatimes.com/industry/banking/finance/banking/demonetisation-impact-bharat-going-digital-for-payments/articleshow/66550675.cms|title=Bharat going digital.|newspaper=The Economic Times |date=9 November 2018 |access-date=22 April 2024|archive-date=3 July 2022|archive-url=https://web.archive.org/web/20220703123440/https://economictimes.indiatimes.com/industry/banking/finance/banking/demonetisation-impact-bharat-going-digital-for-payments/articleshow/66550675.cms|url-status=live |last1=Bhakta |first1=Pratik }}

{{Further|Repurchase agreement}}

Repo (repurchase) rate also known as the benchmark interest rate is the rate at which the RBI lends money to the commercial banks for a short-term (a maximum of 90 days). When the repo rate increases, borrowing from RBI becomes more expensive. If RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate similarly, if it wants to make it cheaper for banks to borrow money it reduces the repo rate. If the repo rate is increased, banks can't carry out their business at a profit whereas the very opposite happens when the repo rate is cut down. Generally, repo rates are cut down whenever the country needs to progress in banking and economy.

If banks want to borrow money (for short term, usually overnight) from RBI then banks have to charge this interest rate. Banks have to pledge government securities as collateral. This kind of deal happens through a re-purchase agreement. If a bank wants to borrow, it has to provide government securities at least worth {{INR}} 1 billion (could be more because of margin requirement which is 5%–10% of loan amount) and agree to repurchase them at {{INRConvert|1.07|b}} at the end of borrowing period. So the bank has paid {{INRConvert|65|m}} as interest. This is the reason it is called repo rate.

The government securities which are provided by banks as collateral can not come from {{abbr|SLR|statutory liquidity ratio}} quota (otherwise the SLR will go below 19.5% of {{abbr|NDTL|net demand and time liabilities}} and attract penalties).

To curb inflation, the RBI increases repo rate which will make borrowing costs for banks. Banks will pass this increased cost to their customers which make borrowing costly in the whole economy. Fewer people will apply for loans and aggregate demand will be reduced. This will result in inflation coming down. The RBI does the opposite to fight deflation. When the RBI reduces the repo rate, banks are not legally required to reduce their own base rate.

{{Further|Repurchase agreement#Reverse repo}}

As the name suggest, reverse repo rate is just the opposite of repo rate. Reverse repo rate is the short-term borrowing rate in which commercial bank park their surplus in RBI. The reserve bank uses this tool when it feels there is too much money floating in the banking system. An increase in the reverse repo rate means that the banks will get a higher rate of interest from RBI. As a result, banks prefer to lend their money to RBI which is always safe instead of lending it to others (people, companies, etc.) which is always risky.

Repo rate signifies the rate at which liquidity is injected into the banking system by RBI, whereas reverse repo rate signifies the rate at which the central bank absorbs liquidity from the banks. Currently, reverse repo rate is 3.35%.{{cite web|date=22 May 2020|title=RBI Governor announces extension of loan moratorium by 3 more months to August 31|url=https://zeenews.india.com/economy/live-rbi-governor-shaktikanta-das-press-conference-on-may-22-2020-2285358.html|access-date=4 June 2020|website=Zee News|archive-date=4 June 2020|archive-url=https://web.archive.org/web/20200604081743/https://zeenews.india.com/economy/live-rbi-governor-shaktikanta-das-press-conference-on-may-22-2020-2285358.html|url-status=live}}

{{Further|Reserve requirement}}

Apart from the {{abbr|CRR|cash reserve ratio}}, banks are required to maintain liquid assets in the form of gold, cash and approved securities. Higher liquidity ratio forces commercial banks to maintain a larger proportion of their resources in liquid form and thus reduces their capacity to grant loans and advances, thus it is an anti-inflationary impact. A higher liquidity ratio diverts the bank funds from loans and advances to investment in government and approved securities.

In well-developed economies, central banks use open market operations—buying and selling of eligible securities by the central bank in the money market—to influence the volume of cash reserves with commercial banks and thus influence the volume of loans and advances they can make to the commercial and industrial sectors. In the open money market, government securities are traded at market-related rates of interest. The RBI is resorting increasing to open market operations in recent years. Generally, the RBI uses:

1. Minimum margins for lending against specific securities.
2. A ceiling on the amounts of credit for certain purposes.
3. The discriminatory rate of interest charged on certain types of advances.

Direct credit controls in India are of three types:

1. Part of the interest rate structure, i.e., on small savings and provident funds, are administratively set.
2. Banks are mandatory required to keep 18% of their NDTL (net demand and time liabilities) in the form of liquid assets.{{cite web |title=Reserve Bank of India |url=https://www.rbi.org.in/ |access-date=2023-08-24 |website=rbi.org.in |archive-date=4 June 2020 |archive-url=https://web.archive.org/web/20200604012019/https://www.rbi.org.in/ |url-status=live}}
3. Banks are required to lend to the priority sectors to the extent of 40% of their advances.

The share of net demand and time liabilities that banks must maintain in safe and liquid assets, such as government securities, cash, and gold. Here it would be pertinent to mention the gold swap of July 2014.{{cite news| url=https://timesofindia.indiatimes.com/business/india-business/RBI-initiates-swap-of-old-gold-with-new-one/articleshow/37907102.cms| title=RBI initiates swap of old gold with new one – Times of India| website=The Times of India| date=6 July 2014| access-date=11 December 2018| archive-date=7 July 2015| archive-url=https://web.archive.org/web/20150707093257/http://timesofindia.indiatimes.com/business/india-business/RBI-initiates-swap-of-old-gold-with-new-one/articleshow/37907102.cms| url-status=live}}{{cite web | url=https://www.businesstoday.in/current/policy/reserve-bank-of-india-initiates-swap-of-old-gold-with-new/story/207890.html | title=Reserve Bank of India initiates swap of old gold with new one | date=7 July 2014 | access-date=11 December 2018 | archive-date=10 December 2018 | archive-url=https://web.archive.org/web/20181210202726/https://www.businesstoday.in/current/policy/reserve-bank-of-india-initiates-swap-of-old-gold-with-new/story/207890.html | url-status=live }} The present SLR is 18.00%.

{{Further|Bank rate}}

Bank rate is defined in Section 49 of the RBI Act of 1934 as the 'standard rate at which RBI is prepared to buy or rediscount bills of exchange or other commercial papers eligible for purchase'. When banks want to borrow long term funds from the RBI, it is the interest rate which the RBI charges to them. It is currently set to 6.50%. The bank rate is not used to control money supply, but penal rates continue to be linked to the bank rate. If a bank fails to meet {{abbr|SLR|statutory liquidity ratio}} or {{abbr|CRR|cash reserve ratio}} requirements then the RBI will impose a penalty of 300 basis points above bank rate.

{{Further|Liquidity adjustment facility}}

Liquidity adjustment facility was introduced in 2000. LAF is a facility provided by the Reserve Bank of India to scheduled commercial banks to avail of liquidity in case of need or to park excess funds with the RBI on an overnight basis against the collateral of government securities.

RBI accepts applications for a minimum amount of {{INRConvert|5|c|lk=c}} and in multiples of {{INR}} 50 million thereafter.

CRR refers to the ratio of bank's cash reserve balances with RBI with reference to the bank's net demand and time liabilities to ensure the liquidity and solvency of the scheduled banks. The share of net demand and time liabilities that banks must maintain as cash with the RBI. The RBI has set CRR at 4.0%{{cite web|date=27 March 2020|title=RBI cuts repo rate cut by 75 bps to 4.4%, CRR by 100 bps to 3%: Full statement|url=https://zeenews.india.com/economy/rbi-cuts-repo-rate-cut-by-75-bps-to-4-4-crr-by-100-bps-to-3-full-statement-2272014.html|access-date=4 June 2020|website=Zee News|archive-date=6 August 2020|archive-url=https://web.archive.org/web/20200806201715/https://zeenews.india.com/economy/rbi-cuts-repo-rate-cut-by-75-bps-to-4-4-crr-by-100-bps-to-3-full-statement-2272014.html|url-status=live}} A 1% change in CRR affects the economy by ₹1.37 trillion. An increase draw this amount from the economy, while a decrease injects this amount into the economy. So if a bank has {{INRConvert|2|b}} of {{abbr|NDTL|net demand and time liabilities}} then it has to keep {{INRConvert|80|m}} in cash with RBI. RBI pays no interest on CRR.

Let's assume the economy is showing inflationary trends and the RBI wants to control this situation by adjusting {{abbr|SLR|statutory liquidity ratio}} and CRR. If the RBI increases SLR to 50% and CRR to 20% then bank will be left only with {{INRConvert|600|m}} for operations. Now it will be very difficult for the bank to maintain profitability with such a small amount of capital. The bank will be left with no choice but to raise its interest rate which will make borrowing by its customers more costly. This will in turn reduce the overall demand and hence prices will eventually come down.

{{Further|Open market operation}}

Open market operation is the activity of buying and selling of government securities in open market to control the supply of money in banking system. When there is excess supply of money, central bank sells government securities thereby sucking out excess liquidity. Similarly, when liquidity is tight, RBI will buy government securities and thereby inject money supply into the economy.

On 23 March 2020, Reserve Bank of India infused ₹1 trillion (short scale) through term repo auction, a massive OMOs (open market operations) purchase of government securities. The Reserve Bank is monitoring the financial market conditions and liquidity situation in the economy as COVID-19 pandemic in India fears of a recession.{{Cite news|url=https://www.businesstoday.in/current/economy-politics/coronovirus-scare-rbi-announces-omos-purchase-of-rs-1-lakh-crore-to-boost-liquidity/story/398973.html|title=Coronavirus scare: RBI announces OMOs purchase of Rs 1 lakh crore to boost liquidity|date=23 March 2020|website=Business Today|access-date=23 March 2020|archive-date=23 March 2020|archive-url=https://web.archive.org/web/20200323120202/https://www.businesstoday.in/current/economy-politics/coronovirus-scare-rbi-announces-omos-purchase-of-rs-1-lakh-crore-to-boost-liquidity/story/398973.html|url-status=live}}

This scheme was introduced in May 2011 and all the scheduled commercial bank can participate in this scheme. Banks can borrow up to 2.5%[https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8248&Mode=0 Reserve Bank of India – Notifications] {{Webarchive|url=https://web.archive.org/web/20180721191946/https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8248&Mode=0 |date=21 July 2018 }}. Rbi.org.in. Retrieved 26 December 2018. per cent of their respective net demand and time liabilities. The RBI receives application under this facility for a minimum amount of {{INR}} 10 million and in multiples of {{INR}} 10 million thereafter.

The important difference from repo rate is that bank can pledge government securities from its SLR quota (up to one per cent). So even if SLR goes below 20.5%RBI/2014-15/445 DBR.Ret.BC.70/12.02.001/2014-15, dt. 16 October 2016 by pledging SLR quota securities under MSF, the bank will not have to pay any penalty. The marginal standing facility rate currently stands at 4.25%.

{{Further|Loan-to-value ratio}}

Loan-to-value (LTV) is the ratio of loan amount to the actual value of asset purchased.

The RBI regulates this ratio so as to control the amount a bank can lend to its customers. For example, an individual wants to buy a car using borrowed money and the car's value is ₹1 million. If the LTV is set to 70% he can borrow a maximum of ₹700,000.

The RBI can decrease or increase to curb inflation or deflation respectively.

Under this measure, the RBI can specifically instruct banks not to give loans to traders of certain commodities e.g. sugar, edible oil, etc. This prevents the speculation/hoarding of commodities using money from banks.{{Citation needed|date=August 2020}}

{{Further|Moral suasion}}

Under this measure, the RBI try to persuade banks through meetings, conferences, media specific things under certain economic trends. For example, when the RBI reduces repo rate, it asks banks to reduce their base rate as well. Another example of this measure is to ask banks to reduce their non-performing assets.

In developing countries like India, monetary policy fails to show immediate or no results because the following factors:

1. People do not employ alternative investment options. A large section of society still depends on saving accounts, fixed deposits, Public Provident Fund for investment. Commercial banks have large deposits. RBI is not the main or even prominent money supplier for these banks. So whatever monetary action central bank takes has little or late impact on the economy.
2. Many people in rural areas are out of the banking net and whatever the RBI does, has no impact on their financial activities.
3. Monsoon uncertainty adversely affects food production and thereby cause food inflation. Monetary policy has no impact on food inflation.

RBI decided to remove charges on RTGS (Real Time Gross Settlement System) and NEFT (National Electronic Funds Transfer).{{cite news | url=http://timesofindia.indiatimes.com/articleshow/69673075.cms | newspaper=The Times of India | title=RBI removes charges on NEFT, RTGS transactions | date=6 June 2019 | access-date=6 June 2019 | archive-date=9 February 2022 | archive-url=https://web.archive.org/web/20220209124833/https://timesofindia.indiatimes.com/business/india-business/rbi-decides-not-to-levy-charges-on-neft-rtgs-transactions/articleshow/69673075.cms | url-status=live }}

In November, RBI introduced a set of draft guidelines to regulate the variable pay of CEOs and top management at private banks. The new rules are in line with the Sound Compensation Practices issued by the Financial Stability Board in April 2009. The rules will apply to CEOs, wholetime directors, and material risk takers at private banks, small finance banks and domestic executives of foreign banks. As per the new rules at least 50% of the pay should be based on individual, unit, business and firm wide performance evaluation which will be capped at 300% of the fixed pay. In case of variable pay above 200% then at least 50% of this amount should be via non-cash instruments. Share linked instruments are included as part of variable pay. Guaranteed bonus should not be part of the compensation package except in case of joining bonus. The RBI also has put clauses in place to clawback/malus in case of deteriorating performance. The bank shall identify a representative set of conditions when the recovery clause for clawback /malus can be invoked.{{cite web|url=https://www.bloombergquint.com/business/rbi-clamps-down-on-variable-pay-of-top-management-at-private-banks|title=RBI Clamps Down on Variable Pay of Top Management at Private Banks|website=BloombergQuint|date=4 November 2019 |access-date=5 November 2019|archive-date=5 November 2019|archive-url=https://web.archive.org/web/20191105051656/https://www.bloombergquint.com/business/rbi-clamps-down-on-variable-pay-of-top-management-at-private-banks|url-status=live}}

A report titled Trend and Progress of Banking in India is published annually, as required by the Banking Regulation Act, 1949. The report sums up trends and developments throughout the financial sector.{{cite news | url=http://www.thehindu.com/opinion/columns/C_R_L__Narasimhan/npa-reduction-a-key-issue/article5408776.ece | title=NPA reduction, a key issue | work=The Hindu | date=2 December 2013 | access-date=2 December 2013 | author=C. R. L. Narasimhan | archive-date=8 December 2013 | archive-url=https://web.archive.org/web/20131208002335/http://www.thehindu.com/opinion/columns/C_R_L__Narasimhan/npa-reduction-a-key-issue/article5408776.ece | url-status=live }} Starting in April 2014, the Reserve Bank of India publishes bi-monthly policy updates.{{cite news | url=http://www.thehindu.com/opinion/editorial/maintaining-the-status-quo/article5859603.ece | newspaper=The Hindu | title=Maintaining the status quo | date=2 April 2014 | access-date=6 April 2014 | archive-date=5 April 2014 | archive-url=https://web.archive.org/web/20140405213135/http://www.thehindu.com/opinion/editorial/maintaining-the-status-quo/article5859603.ece | url-status=live }}

In August 2020, RBI set up a five membered Committee under the chairmanship of KV Kamath, the former CEO of the ICICI bank in order to make recommendations on the norm for resolution of COVID-19 related stressed loans. In order to restructure the loans up to ₹150 billion, the expert Committee was tasked with coming up with a sector specific plan for successful resolution of the stressed loans. The parameters were to include aspects related to leverage, liquidity and debt serviceability.{{cite news|url=https://economictimes.indiatimes.com/news/economy/policy/rbi-forms-five-member-committee-under-kv-kamath-panel-to-recommend-parameters-for-loan-restructuring/articleshow/77411332.cms|title=RBI forms five member committee under KV Kamath, panel to recommend parameters for loan restructuring|website=The Economic Times|access-date=2 September 2020|last1=Rebello|first1=Joel|archive-date=30 October 2020|archive-url=https://web.archive.org/web/20201030170113/https://economictimes.indiatimes.com/news/economy/policy/rbi-forms-five-member-committee-under-kv-kamath-panel-to-recommend-parameters-for-loan-restructuring/articleshow/77411332.cms|url-status=live}}

In April 2018, RBI banned banks from supporting crypto transactions after cases of fraud through virtual currencies were reported. However, the Supreme Court struck down the ban in March 2020. Among the reasons cited was that cryptocurrencies were not illegal though unregulated in India.{{cite web|title=Reserve Bank of India - Notifications|url=https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11243|access-date=6 June 2021|website=rbi.org.in|archive-date=6 June 2021|archive-url=https://web.archive.org/web/20210606135435/https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11243|url-status=live}}

• Reserve Bank Staff College,{{cite web |title=Reserve Bank Staff College |url=https://www.rbi.org.in/Scripts/rbsc.aspx |location=Anna Salai, Teynampet, Chennai |website=Reserve Bank of India |access-date=7 February 2023 |archive-date=30 November 2022 |archive-url=https://web.archive.org/web/20221130123403/https://rbi.org.in/Scripts/rbsc.aspx |url-status=live }} Chennai
• Reserve Bank of India Academy,{{cite web |title=About Us |url=https://rbiacademy.rbi.org.in/About |website=Reserve Bank of India Academy |publisher=Reserve Bank of India |access-date=7 February 2023 |location=Shahid Bhagat Singh Road, Mumbai |archive-date=7 February 2023 |archive-url=https://web.archive.org/web/20230207061443/https://rbiacademy.rbi.org.in/About |url-status=live }} Mumbai
• Reserve Bank of India College of Agricultural Banking,{{cite web |title=Contact Us |url=https://cab.rbi.org.in/contact/contactus |website=College of Agriculture Banking |publisher=Reserve Bank of India |access-date=7 February 2023 |location=University Road, Pune |archive-date=7 February 2023 |archive-url=https://web.archive.org/web/20230207061440/https://cab.rbi.org.in/contact/contactus |url-status=live }} Pune

The 3 training colleges of the Reserve Bank of India, train the officers of the Reserve Bank of India, and the banking industry.[https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/56248.pdf 14: Human Resources Development and Organisational Matters] {{Webarchive|url=https://web.archive.org/web/20230207061438/https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/56248.pdf |date=7 February 2023 }} Reserve Bank of India

• National Institute of Bank Management
• Institute for Development and Research in Banking Technology
• Indira Gandhi Institute of Development Research

Regulatory bodies:{{Cite journal |title=Financial Regulatory Bodies in India |url=https://www.partners.assetplus.in/post/sip-calculator |journal=Assetplus|access-date=2 August 2022 |archive-date=10 August 2022 |archive-url=https://web.archive.org/web/20220810043659/https://www.partners.assetplus.in/post/sip-calculator |url-status=live }}

• Export-Import Bank of India
• National Bank for Agriculture and Rural Development
• Small Industries Development Bank of India
• National Housing Bank

The Bank for International Settlements signed an agreement with Central Bank of Malaysia, Bank of Thailand, Bangko Sentral ng Pilipinas, Monetary Authority of Singapore, and the Reserve Bank of India on 30 June 2024 as founding member of Project Nexus, a multilateral international initiative to enable retail cross-border payments. Bank Indonesia involved as a special observer. The platform, which is expected to go live by 2026, will interlink domestic fast payment systems of the member countries.{{Cite web |last=Kawale |first=Ajinkya |date=1 July 2024 |title=RBI, four Asean countries tie up for cross-border payments platform |url=https://www.business-standard.com/finance/news/rbi-asean-countries-to-create-platform-for-retail-cross-border-payments-124070100585_1.html |access-date=2 July 2024 |website=Business Standard}}

{{Portal bar|Banks|Business and economics|Numismatics|India}}

{{Div col|colwidth=22em}}

• Inflation in India
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• Core inflation
• Open market operation
• Dot-com bubble
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• Free banking
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• Government debt
• Digital rupee
• Cost-of-living index
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• Consumer price index
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• Outline of economics
• List of central banks
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• List of governors of the Reserve Bank of India
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{{Div col end}}

{{Clear}}

{{notelist}}

{{reflist}}

• S. L. N. Simha. History of the Reserve Bank of India, Volume 1: 1935–1951. RBI. 1970. {{ISBN|81-7596-247-X}}. ([http://rbidocs.rbi.org.in/rdocs/content/PDFs/89630.pdf 2005 reprint PDF])
• Reserve Bank of India: Functions and Working. RBI. 2005.([https://rbidocs.rbi.org.in/rdocs/Content/PDFs/FUNCWWE080910.pdf 2005 reprint PDF])
• G. Balachandran. The Reserve Bank of India, 1951–1967. Oxford University Press. 1998. {{ISBN|0-19-564468-9}}. ([http://rbidocs.rbi.org.in/rdocs/content/PDFs/90010.pdf PDF])
• A. Vasudevan et al. The Reserve Bank of India, Volume 3: 1967–1981. RBI. 2005. {{ISBN|81-7596-299-2}}. ([http://rbidocs.rbi.org.in/rdocs/content/PDFs/90060.pdf PDF])
• Roy, Tirthankar (2023). The Reserve Bank of India: Volume 5, 1997–2008. Vol. 5. Cambridge University Press
• Cecil Kisch: Review "The Monetary Policy of the Reserve Bank of India" by K. N. Raj. In: The Economic Journal. Vol. 59, No. 235 (Sep. 1949), pp. 436–438.
• Findlay G. Shirras: The Reserve Bank of India. In The Economic Journal. Vol. 44, No. 174 (Jun. 1934), pp. 258–274.

{{Commons category}}

• {{Official website|https://www.rbi.org.in/}}
• [https://rbi.org.in/Scripts/FAQView.aspx?Id=119 FAQ answers and Guidelines on Reserve Bank of Indias]
• [http://indiatoday.intoday.in/story/rupees-500-1000-currency-note-faq-narendra-modi/1/805954.html What the FAQ just happened! All your questions about Rs 500–1000 notes answered], India Today, 8 November 2016
• [http://www.finmin.nic.in/ Ministry of Finance, Government of India]

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