Reserve Bank of India Functions & News Events
What is the Reserve Bank of India?
The Reserve Bank of India (RBI) is the central bank of India and is responsible for setting monetary policy. The RBI was first established in 1935 and is responsible for setting the overnight interbank lending rate and creating financial stability in the country. This overnight rate is known as the Mumbai Interbank Offer Rate (MIBOR) and it serves as the benchmark for interest rates in India. Without the RBI, the credit markets would not function properly and the flow of currency in the country would dry up.
Functions of the Reserve Bank of India
- Currency - the RBI is responsible for issuing and destroying currency
- Monetary policy - implement and monitor the monetary policies of India. By maintaining the credit markets and interest rate levels it ensures liquidity in the market
- Government's Banker - the RBI provides merchant banking functions to the central and state governments
- Banker to Banks - maintains banking accounts for all scheduled banks
Recent Reserve Bank of India News Events
- The RBI has recently been battling inflation in the country and has held the benchmark interest rate to 7.75 percent
- The rupee has gained 9.5 percent in '08 and is the best performing of the 10 most-traded Asian currencies
- Recent capital inflows as a result of the Indian bull market have lead to a number of asset bubbles