Reserve Bank of India V/s. Central Government of India

In the monetary system of all countries, the central bank occupies a most important place. The Central Bank is an apex institution of the monetary system which regulates the functioning of the commercial banks of a country. The Central Bank of India is ‘Reserve Bank of India’. The Central Bank of a country promotes economic growth and stability and controls inflation. RBI is an institution of national importance and the pillar of surging Indian economy. RBI is a member of IMF. Currently, the RBI regulates all payments and settlements in the economy.

In India, both the Government and the Central Bank, in their functioning, are guided by public interest and the requirements of the Indian economy. Both the Government and the Central Bank seeks to maintain financial stability in the country. The RBI is not statutorily independent, as the governor is appointed by the government. However, it has enjoyed broad autonomy in regulating the banking sector. The Reserve Bank, apart from it being a reasonable body, is answerable to the Central Government.