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Unit 2: Reserve Bank of India

12. Economic Department: This department formulates banking policies for better Notes
implementation of economic policies of the Government.
13. Inspection Department: This department undertakes inspection of various offices of the
commercial banks.
14. Department of Accounts and Expenditure: This department maintains proper records of
all receipts and expenditures of the Reserve Bank of India.
15. RBI Services Board: This Board deals with the selection of new employees for different
posts in the Reserve Bank of India.

16. Department of Supervision: This department was set up for conducting proper supervision
of commercial banks.

Self Assessment

Fill in the blanks:
1. ............................................ is usually defined as the central bank’s operational and
management independence from the government.
2. The BFS oversees the functioning of ............................................ (DBS), Department of Non-
Banking Supervision (DNBS) and Financial Institutions Division (FID) and gives directions
on the regulatory and supervisory issues.

3. The ............................................ performs financial supervision under the guidance of the
Board for Financial Supervision (BFS).
4. A central board of directors governs the Reserve Bank’s affairs. The ............................................,
in keeping with the Reserve Bank of India Act, appoints this board.
5. The ............................................ of our country is the Reserve Bank of India (RBI).

2.2 Objectives of RBI

The main objectives of the Reserve Bank of India are:

1. Promotion of monetisation and monetary integration of the economy.
2. Amendment and modification of currency and regulation of foreign exchange.
3. Promotion of specialised financial institutions at national and regional levels to enhance
facilities for term finance to industry.
4. Provide support to planning authorities and governments to bring economic development
with stability and social justice.

5. Institutionalization of savings through promotion of banking habit.
6. Building up a sound and adequate banking and credit structure.
7. Evolving a well-differentiated structure of institutions for providing credit for Agriculture
and Allied (related) activities.
2.3 Reserve Bank and Industrial Finance

For promoting industrialization, the Reserve Bank has been providing finance through various
institutions, to large, medium and small-scale industries. For this purpose it has helped in

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