Explain the role of Reserve Bank of India in the Indian economy.

(i) In India, the Reserve Bank of India issues currency notes on behalf of the central government.

(ii) As per Indian law, no other individual or organisation is allowed to issue currency.

(iii) No individual in India can legally refuse a payment made in rupees.

(iv) The Reserve Bank of India supervises the functioning of formal sources of loans.

(v) The RBI monitors that banks maintain a minimum cash balance out of the deposits they receive.

(vi) The RBI sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries, to small borrowers etc.

(vii) Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate.