2. or less stable. 3. Modern Banking and

2. Stable Structure of Interest Rates:

The interest rate policy of the Reserve Bank has resulted into a relatively stable structure of interest rates in the economy. The bank initially adopted cheap money policy from its beginning.

The bank rate remained unchanged at the low level of 3 percent upto 1951. Some upward changes have been made in subsequent years to combat inflationary pressure. The Bank rate has remained substantially lower than the market rate of interest. The bank rate has remained more or less stable.

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3. Modern Banking and Credit structure:

The Reserve Bank has succeeded in building up a sound modern banking and credit structure. The Bank enjoyed vast supervisory powers which enabled it to guide the development of banking on sound lines. Training of bank personnel has improved their efficiency. The geographical and fundamental coverage of the banking has also increased substantially.

4. Cheap Remittance Facilities:

The Reserve Bank has introduced very cheap remittance facilities. These have been widely used by the commercial banks, the Government and cooperative banks.

5. Successful Management of Public Debt:

The Reserve Bank has successfully managed the public debt. It has floated loans for the Government at low rates of interest. It has helped in raising funds for the expansion of public sector in the economy. It has also provided short term advances to the Government.

6. Exchange Stability:

The Reserve Bank has succeeded in maintaining the exchange stability to a large extent. The Bank has maintained the exchange value of the rupee at a relatively higher rate than would have prevailed in the market.

It has made judicious use of exchange control measures to keep the demand for foreign exchange within the limits of the available supplies.

7. Enhanced Public Confidence in Banking Sector:

The Reserve Bank has taken appropriate measures to enhance public confidence in the banking systems. Bank strictly supervises the working of the Commercial banks so as to avoid their failures.

The Deposits Insurance System has also been introduced to protect the interests of the depositors. It has proved an important factor in promoting depositors’ confidence in banks.

8. Central Authority of Indian Money Market:

The Reserve Bank has functioned as the central authority in the Indian money market. It has supervised and controlled commercial banks, cooperative banks and non-banking finance companies accepting deposits from the public.

9. Development of Bill Market:

The Reserve Bank has made serious efforts to develop a sound bill market in India. It has imparted a substantial degree of elasticity to the credit structure of the country by introducing the several Bill Market Schemes.

10. Rational Allocation of Credit:

The Reserve Bank has adopted measures to distribute credit to all productive sectors in accordance with social objectives and priorities. The scheme of Differential Interest Rates was introduced to grant loans at concessional rates to weaker sections of the society. The priority sector including agriculture, small scale industries, exports, trades etc., get credit at low rate of interest.

11. Monetary Stability:

The Bank has made a rational use of quantitative and qualitative measures of credit control to maintain monetary stability. These controls were generally employed in the direction of greater restraint in the context of persistent imbalances in the economy. It has tried to control the pace of monetary expansion.

12. Contribution to Economic Development:

The Reserve Bank has played an active role in promoting economic development of the Indian economy. It has helped in setting up a sound structure of Development Banking. Several Industrial, Agricultural, Export and other specialised financial institutions have been established.

The Reserve Bank has helped in building up a well-differential structure of financial institutions to cater to the requirements I of the different sectors of the economy.