![]() Also it needs to prepare and implement the foreign exchange rate policy which will help in attaining the exchange rate stability. In order to maintain stability in the external value of rupee, it has to prepare domestic policies in that direction. Exchange Rate Management : It is an essential function of the RBI.It provides overdraft facility to the government when it faces financial crunch. It manages government public debts and maintains foreign exchange reserves on behalf of the government. It maintains government accounts, provides financial advice to the government. It works as a representative of the government even at the international level. It performs various banking function such as to accept deposits, taxes and make payments on behalf of the government. Banker to the Government : The RBI being the apex monitory body has to work as an agent of the central and state governments.(RBI has 19 regional offices, most of them in state capitals and 9 Sub-offices.) Thus it is called as the lender of the last resort. Similarly in need or in urgency these banks approach the RBI for fund. Every commercial bank has to maintain a part of their reserves with its parent’s viz. The RBI can control the volumes of banks reserves and allow other banks to create credit in that proportion. Banker to other Banks : The RBI being an apex monitory institution has obligatory powers to guide, help and direct other commercial banks in the country.It issues these notes against the security of gold bullion, foreign securities, rupee coins, exchange bills and promissory notes and government of India bonds. ![]() The RBI has powers not only to issue and withdraw but even to exchange these currency notes for other denominations. These currency notes are legal tender issued by the RBI. ![]()
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