Role of the Reserve Bank of India in the Indian economy :
1. Issue of currency - The RBI issues currency notes on behalf of the Central Government, and no other individual or organisation is allowed to issue currency in India.
2. Supervision of banks - The RBI supervises the functioning of formal sources of loans. It monitors that the banks actually maintain the minimum cash balance out of the deposits they receive.
3. Ensuring fair distribution of credit - It sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries and small borrowers.
4. Collection of information - Periodically banks have to submit information to the RBI on how much they are lending, to whom and at what interest rate.
5. Control of money supply and inflation - By regulating credit and interest rates, the RBI controls the supply of money in the economy and helps to maintain price stability.
(Any three points carry full marks.)