Reserve Bank of India (RBI)

The Reserve Bank of India is the central monetary authority responsible for regulating the financial system, managing foreign exchange reserves, issuing currency, and maintaining price stability under the Reserve Bank of India Act, 1934.

Under Indian Polity & Governance

• It formulates and executes monetary policy through the Flexible Inflation Targeting framework to maintain price stability while supporting economic growth.
• As the primary regulator of the financial sector, it enforces prudential norms to safeguard systemic stability and resolve non-performing assets.
• It acts as the banker to the government, manager of public debt, and lender of last resort to ensure liquidity and market confidence.

UPSC frequently frames questions around the balance between the RBI's institutional autonomy and fiscal policy coordination with the government. Candidates are evaluated on its regulatory mechanisms for controlling banking sector stress, such as Prompt Corrective Action frameworks and bad loan resolution mechanisms. Questions also explore the RBI's evolving mandate in managing external macroeconomic shocks, promoting financial inclusion, and developing Central Bank Digital Currency.

• Statutory, regulatory and various quasi-judicial bodies GS2
• Indian Economy GS3