Role of Reserve Bank of India

Main Functions

Monetary Authority:

Formulates, implements and monitors the monetary policy.

Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors.Regulator and supervisor of the financial system:

Prescribes broad parameters of banking operations within which the country's banking and financial system functions.

Objective: maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public.

Manager of Foreign Exchange

Manages the Foreign Exchange Management Act, 1999.

Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India .

Issuer of currency:

Issues and exchanges or destroys currency and coins not fit for circulation.

Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role

Performs a wide range of promotional functions to support national objectives.

Related Functions

Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.

Banker to banks: maintains banking accounts of all scheduled banks.


All urban co-operative banks are being looked after by its department ‘Urban Banks Department’.As such ,The Kangra Co-operative Bank Limited  also comes under this department’s jurisdiction. A brief note on Urban Banks department is appended herebelow for the information of all users of this web site.


Urban Banks Department

The Urban Banks Department looks after the regulation and supervision of primary co-operative banks. The banks are outside the federal rural credit structure supervised by NABARD and function primarily in the urban areas.

The activities of the Department can be broadly divided into four areas, viz., regulatory, supervisory, operational and developmental.

The regulation and supervision of primary co-operative banks, popularly known as "urban co-operative banks", is performed by the Urban Banks Department in co-ordination with the Registrars of Co-operative Societies of the State Governments.

The Reserve Bank of India regulates the interest rates on deposits and advances only to the extent of prescribing interest rate on saving accounts and a minimum lending rate on advances. It prescribes minimum cash reserve and liquid assets to be maintained as a ratio of net demand and time liabilities, and also lays down norms for investments in other assets by primary co-operative banks.

The Department coordinates the refinance facilities granted by the Reserve Bank of India to State Co-operative Banks on behalf of urban co-operative banks for financing 22 broad groups of approved cottage and tiny industries as an incentive for financing industrial activities.

As a part of developmental activity, the Reserve Bank of India conducts special courses for senior personnel of urban co-operative banks at its College of Agricultural Banking , Pune.

The Reserve Bank has recently reviewed the new bank licensing policy for cooperative banks and the branch licensing policy for them in pursuance of the recommendations of a High Power Committee under the Chairmanship of Shri K. Madhava Rao, Member, Central Board, Reserve Bank of India .

In coordination with state co-operative departments and the apex co-operative banks, the Reserve Bank closely monitors the performance of a co-operative banks identified as `weak' in different states.