Banks are fundamental to the nation's financial system. The central bank has a critical role to play in ensuring the safety and soundness of the banking system-and in maintaining financial stability and public confidence in this system.

  • Mandate /Goals: Regulation aimed at protecting depositors’ interests, orderly development and conduct of banking operations and fostering of the overall health of the banking system and financial stability.
  • Perimeter: Commercial banks (91), All India Financial Institutions (5), Credit Information Companies (4), Regional Rural Banks (56) and Local Area Banks (4).
  • Evolution: Regulatory functions have evolved with the development of the Indian banking system and adoption of prudential norms based on international best practices.

Tools of Regulation

Policy Framework

A Few Recent Initiatives

Looking Ahead

Building a heterogeneous banking system

The Reserve Bank is striving towards a more competitive, efficient and heterogeneous banking structure. It believes that a heterogeneous banking system can meet varied customer needs in a more efficient manner. As different banks would operate differently based on their reach, liquidity, capitalisation and market power considerations, they will be able to offer a wider range of customer service enhancing consumer welfare. Universal bank licensing policy and guidelines for small finance and payment banks are a step in the direction of building a heterogeneous banking system.

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