FUNCTION OF CENTRAL BANK

WITH SPECIAL REFERENCE TO RBI

And Their Impact on the
Indian Economy

Presented by
Soumya Dash BAP/23/304 Yukti BAP/23/320
Mahak Tiwari BAP/23/206 Shifa BAP/23/322
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INTRODUCTION
What Is A Central Bank?
A central bank is the apex financial institution responsible for
managing a country’s monetary system. It regulates the supply of
money, controls inflation, issues currency, and ensures financial
stability. Unlike commercial banks, it does not deal with the general
public. Instead, it acts as a banker to the government and to other
banks, maintaining the overall health of the financial system.

Globally, institutions like the Federal Reserve (USA), the European

Central Bank (EU), and the Bank of England (UK) perform these
functions in their respective economies.
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FUNCTIONS OF CENTRAL BANK

Common Functions of a Central Bank

1 Controls inflation and interest rates 4 Supervises commercial banks

2 Issue legal tender (currency) 5 Lender of last resort

3 Maintain foreign exchange reserves 6 Manages goverment debt

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RESERVE BANK OF INDIA
The Reserve Bank of India (RBI) is India’s central bank and
primary monetary authority. Established on 1st April 1935 under
the RBI Act, 1934, it plays a vital role in regulating the country’s
banking system, maintaining financial stability, and guiding the
economy through effective monetary policy.

Founded in 1935; nationalized in 1949

Headquartered in Mumbai
Regulates currency issuance, banking, and monetary policy
Aims to ensure economic growth, price stability, and financial
inclusion
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FUNCTIONS OF RBI
Monetary Authority Issuer of Currency
Controls inflation and ensures price Sole authority to issue legal tender
stability through monetary policy. in India (except ₹1 notes and coin
issued by the goverment.

Manager of foreign exchange Regulator of the financial

Maintains foreign currency reserves system
and manages the exchange rate Supervises and regulates banks and
under FEMA. NBFCs to ensure financial stability.
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FUNCTIONS OF RBI
Developmental Role Custodian of foreign reserves
Promotes financial inclusion, Manages India's foreign exchange
digital payments, and rural credit. reserves to support global trade.

Banker to the Goverment Banker's Bank

Manges govermet's accounts, Provides financial services and
public debt and facilitates liquidity to commercial banks and
borrowing. acts as a lender of last resort.
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RBI'S IMPACT
ON THE INDIAN ECONOMY
Controls Inflation
Through interest rate changes and
The Reserve Bank of India plays a money supply control, it stabilizes
significant role in shaping prices and ensures purchasing power.
India’s economic landscape. Its
policies influence inflation,
Boost Economic Growth
employment, investment, and
By maintaining financial stability and
the overall financial ecosystem. supporting productive sectors, the RBI
fosters long-term economic
development.
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RBI'S IMPACT
ON THE INDIAN ECONOMY
Maintains Financial Stability Enhance Global Confidence
Strong regulatory mechanisms protect Stable currency and sound monetary
banks and financial institutions from policies boost international investor
crises. confidence in India.

Promotes Employment & Improves Financial Inclusion

Investment Through credit policies and By promoting banking access in rural
support for priority sectors, the RBI and remote areas, it bridges the gap
indirectly contributes to job creation between the unbanked and formal
and infrastructure development. economy.
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RECENT INITIATIVS
Introduction to Digital Rupee
Launching a digital currency to modernize the economy and reduce
reliance on cash transactions.

Enhancing Cyber Security in banking

Strengthening security measures to protect against cyber threats in the
banking sector.

Promoting Financial Literacy

Initiatives like financial literacy campaigns to increase public awareness
about banking products, services, and investments.
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RECENT INITIATIVS
Supporting Financial Technology (FinTech)
Encouraging innovation and investment in the FinTech sector to improve
financial inclusion and accessibility.

Encouraging Green Finance

Initiating policies to support environmentally sustainable investments
and green bonds.

Developing Payment System

Expanding and upgrading the payment infrastructure, including UPI and
mobile banking platforms, to ensure accessibility for all.
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CONCLUSION
The Reserve Bank of India, as the central bank of the country, plays a
crucial role in maintaining monetary stability, regulating the
financial sector, and promoting overall economic development. Its
core functions—such as controlling inflation, managing currency,
and supervising banks—ensure the smooth functioning of the
economy. In addition, its recent initiatives like the introduction of
the digital rupee, enhanced cybersecurity, and support for FinTech
reflect its commitment to adapting in a rapidly evolving financial
landscape. By balancing traditional responsibilities with modern
innovation, the RBI continues to strengthen India’s economic
foundation and global financial standing.
THANK YOU
Presented by
Soumya Dash BAP/23/304 Yukti BAP/23/320
Mahak Tiwari BAP/23/206 Shifa BAP/23/322