Central Banking in India: Issues and Challenges

There are specialties of the central banks in the developing countries that is important to learn and share, and India has a great importance and potential in the global economy. Indian Central Bank being in existence prior to the country's independence played an important role in the nation building process by way of institution building. Though a monetary authority like any central bank, it is sui generis with multiple mandates as the manager of public debt of the Government of India and the banker to the Government, issuer and manager of currency, bank regulation and supervision. The role of the Reserve Bank of India (RBI) has been redefined through gradual evolution and adaptation, along with some statutory changes, and not through any radical restructuring. While assessing the autonomy of the RBI, one should recognise that RBI is not a pure monetary authority but is responsible for several other functions also, as a central bank. India endeavoured to adopt the best practices in central banking and thus, de facto, there has been enhancement of the autonomy of the RBI. The findings relate to the role of RBI in the nation building process, the smooth, gradual expansion of its mandate and operations, and its contribution to the reform process have a scientific value.3