Lesson 4.2: Banking & Financial Institutions – RBI, NABARD, SEBI
Banking and financial institutions play a vital role in India’s economic development, regulation, and financial stability.
Reserve Bank of India (RBI):
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Role: Central bank of India, regulates currency, credit, and banking system.
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Functions:
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Issue of currency
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Lender of last resort
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Monetary policy formulation
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Regulation of banks and financial institutions
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NABARD (National Bank for Agriculture and Rural Development):
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Role: Focused on agriculture and rural development.
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Functions:
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Provide credit and refinance to banks for rural projects
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Support farmers, cooperatives, and rural infrastructure development
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Promote financial inclusion in rural areas
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SEBI (Securities and Exchange Board of India):
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Role: Regulator of securities market.
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Functions:
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Protect investors’ interests
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Regulate stock exchanges and intermediaries
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Promote transparency and fair trading practices
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Other Financial Institutions:
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SIDBI: Support for Micro, Small, and Medium Enterprises (MSMEs)
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Exim Bank: Facilitates foreign trade financing
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Insurance Regulatory & Development Authority (IRDAI): Regulates insurance sector
Key Points for Revision:
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RBI – central bank, monetary regulation
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NABARD – agriculture and rural credit
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SEBI – securities market regulator
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Other institutions – SIDBI, Exim Bank, IRDAI
Example Question (Prelims Practice):
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“Which institution is known as the ‘lender of last resort’ in India?” → RBI
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“Which body regulates the Indian stock market?” → SEBI
