Countries are governed by two set of policies which help in the growth and development of the economy. These two policies are:
- Fiscal Policy
- Monetary policy
Fiscal policy is framed and implemented by the government of the country whereas the monetary policy is governed by the central bank of the country. In India, it is the Reserve Bank of India, commonly referred as the RBI.
What is RBI?
RBI stands for Reserve Bank of India. It is often referred as the Central Bank of India. RBI was formed with the primary objective of supervising the financial sector of India which comprises of:
- Financial Institutions
- Non-financial Institutions
- Banks
What Does Its Preamble Says?
The Preamble of RBI explains the basic function with the wordings as “"…to regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage."