Decoding RBI

  1. Geographical presence – RBI’s central office is located at Mumbai near the famous Asiatic Library. Further, it has 31 regional offices in different locations, mostly metro cities, across the country.
  2. The Functioning– RBI functions through 34 different departments and each department take care of different aspect of economy/banking. It’s like a mini government wherein you have Regional offices representing as state government and Central office departments as ministry of central government.
  3. The mandate – The Preamble to the Reserve Bank of India Act, 1934, under which it was constituted, specifies its objective as “to regulate the issue of Bank notes 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”. The primary role of the RBI, as the Act suggests, is monetary stability, that is, to sustain confidence in the value of the country’s money or preserve the purchasing power of the currency.

In a country where a large section of the society is still poor, inclusive growth assumes great significance. Access to finance is essential for poverty alleviation and reducing income inequality. One of the core functions of the RBI, therefore, is to promote financial inclusion that leads to inclusive growth. As the central bank of a developing country, the responsibilities of the RBI also include the development of financial markets and institutions. Broadening and deepening of financial markets and increasing their liquidity and resilience, so that they can help allocate and absorb the risks entailed in financing India’s growth is a key objective of the RBI.