Question

In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?

Answer 1

Hint: The Reserve Bank of India (RBI) is India's central bank and regulatory authority, reporting to the Government of India's Ministry of Finance. It is in charge of the Indian rupee's issue and supply, as well as the banking system's supervision.

Complete answer:
RBI – The Reserve Bank of India (RBI) is India's central bank, which was created under the Reserve Bank of India Act on April 1, 1935. The Reserve Bank of India is in charge of managing India's currency and credit systems and uses monetary policy to maintain financial stability.

In this way, the RBI oversees the operation of banks –
-It examines whether banks keep a minimum cash balance on their deposits.
-It ensures that people from all walks of life, not only the wealthy and influential businessmen and dealers, receive loans.
-The above premise is supported by periodic disclosures submitted by banks to the RBI, which include information on who the bank has lent money to, at what interest rate, and so on.

This is required to ensure that everyone who receives a loan is treated equally. Our goal is for all industries to expand. Loans should be made available to small-scale businesses as well. As a result, the economy of the country will expand.

Note:
-The RBI's present job as India's central bank is to maintain the country's monetary stability by regulating the economy, issuing currency, supporting growth, and monitoring financial institutions.
-The commercial banks, not the RBI, are responsible for providing credit to the common public.