Explain any four functions of Reserve Bank of India.

Answer: The Reserve Bank of India (RBI), set up in 1935, is the central bank of India. Its main functions:

1. Issue of currency: RBI has the sole right to issue currency notes (except one-rupee notes and coins, issued by the Government of India).
2. Banker to the government: It keeps the accounts of central and state governments, receives and makes payments for them, manages public debt and gives ways and means advances.
3. Banker's bank: Commercial banks keep a part of their deposits (cash reserve ratio) with RBI; it gives them loans and acts as a clearing house.
4. Lender of the last resort: It gives financial help to banks in times of crisis.
5. Controller of credit: It regulates the volume of credit through bank rate, repo rate, open market operations, CRR, SLR and selective credit controls to control inflation.
6. Custodian of foreign exchange reserves: It maintains the external value of the rupee and manages foreign exchange under FEMA.
7. Supervision and development: It licenses, regulates and inspects banks and promotes financial inclusion and agricultural and industrial credit.