The following points highlight the five major regulatory and promotional roles of the R.B.I.
Role # 1. Greater Monetisation:
Over the years, the R.B.I, has been mobilising savings through its members (commercial banks) and other financial institutions for productive purposes.
By putting pressures on commercial banks to open branches in rural and semi-urban areas the R.B.I, has succeeded in developing banking habits of the people. This has led not only to greater monetisation of the economy but has helped to reduce the dependence of the people on indigenous banks and private moneylenders.
Role # 2. Providing Security to the Depositors:
A major obstacle to the development of banking institutions in India has been frequent bank failures. This has always acted as a major hindrance to deposit mobilisation. This is why the R.B.I, took initiative in establishing the Deposit Insurance Corporation of India in 1962. The basic objective was to provide security to the depositors.
Role # 3. Provision of Rural Credit:
From the very beginning the development of institutional credit for agriculture has been a major function of the R.B.I. It developed the ARDC in 1963. It was replaced by NABARD in 1982.
Role # 4. Setting up Term-Lending Institutions:
The R.B.I, has also taken the initiative in setting up several specialised financial institutions after Independence. The basic objectives was to meet the long-term credit needs of large scale industries. The public financial institutions have, no doubt, made a significant contribution to the industrialisation of the country.
Role # 5. Giving Advice:
Finally, R.B.I.’s advisory function has increased considerably in view of the Central Government’s attempts to accelerate the pace of industrialisation as also pace of development. Now the R.B.I, not only advises the Government on purely financial matters but also in general economic problems. Thus, the R.B.I, has been playing a dynamic role in the process of development of the country.