rbi in the developments in the indian economy? my submission is that the rbi has, as part of public policy, made some contributions to overall price stability and financial stability while enabling respectable growth in the recent period. further, it is generally recognised that the financial sector and the external sector in india display considerable strength and resilience, though there are some areas that need attention. in india, most of the literature on public administration concentrates on organisation and functioning of central and state governments, statutory corporations, public enterprises, and constitutional bodies. perhaps there is merit in devoting the rest of the address to filling up this gap and discussing organisation and functioning of the rbi, in some detail. on the rbi ’ s mandate i requested my friend shri kale – our friendship is a little over thirty years old – to advise me on the focus of today ’ s address. he said that i could shed some light on what rbi does. in particular, he suggested that i may narrate the process of decision making in the rbi and the extent to which the ministry of finance comes into the picture. i believe that shri kale was being not merely inquisitive but also mischievous by posing some complex, if not controversial, issues in a somewhat innocuous fashion. yet, i will take the bait. the rbi was established under the reserve bank of india act, 1934 on april 1, 1935 as a private shareholders'bank, but is fully owned by the government of india, since its nationalisation in 1949. the preamble to the rbi act describes the basic objective of the constitution of the rbi as “ to regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in india and generally, to operate the currency and credit system of the country to its advantage ”. thus, there is no explicit mandate for price - stability or formal inflation targeting. over the years, the twin - objectives of monetary policy in india have evolved as : maintaining price stability and ensuring adequate flow of credit to facilitate the growth process. the relative emphasis between the twin - objectives is modulated as per the prevailing circumstances and is articulated in the policy statements. consideration of macroeconomic and financial stability is also subsumed in the articulation of policy. the rbi is also entrusted with the management of foreign exchange reserves, which are reflected in its balance sheet. while the rbi is essentially a monetary authority, its founding statute mandates it to be the manager of public debt of the government of

to address single - point - of - failure risks arising from market concentration, as much as they need to be alert to new points of failure arising from shifting value chains. the indian experience 12. the approach to regulation taken by the reserve bank has been to create the environment 2 / 4 bis central bankers'speeches where digital innovation can thrive. this involved, to begin with, taking the initiative to set up the basic infrastructural entities which provided the rails on which innovative products can run – idrbt and npci, to name two. regulation sought actively to facilitate wider participation to include non - banks ( e. g. mobile wallets issued by non - banks ) and increase interoperability among different payment systems. popular participation is created through making transactions simple and convenient, keeping costs low and minimising risks to customer ( 2fa or afa, positive confirmation, user - friendly switch - on - switch - off facility on card - not - present or on - line transactions etc ). data storage requirements aim to promote data safety and privacy. customer data protection from cybercrime is being ensured through minimizing vulnerable access points in the system through encouraging tokenisation. 13. as the digital payments landscape is maturing, rbi ’ s regulatory attention is shifting to the next level of reforms. upscaling of supporting infrastructure like rtgs and neft to be available round - the - clock not only improves choices for customers and businesses alike, they enhance the availability to non - banks and reduce settlement risk of satellite payments systems. 14. a customer protection framework with limited liability for customers, online dispute resolution, digital ombudsman scheme, etc., are unique developmental initiatives. we have also benchmarked our payment systems with global best practices. these efforts have led to india reporting one of the lowest digital payment fraud rates across the globe. 15. to foster innovation, the reserve bank has come out with enabling framework for regulatory sandbox with the objective of fostering orderly and responsible innovation in financial services, promoting efficiency and bringing benefit to consumers. a reserve bank innovation hub ( rbih ) has been set up to promote innovation across the financial sector by creating an enabling ecosystem where academics, technology, finance and regulators are brought together. 16. rapid technological transformation of the financial sector has led to some peculiar challenges. one can witness a degree of friction in compliance, not characteristic of a typically well - regulated financial system. regulatory initiatives, especially those intended for customer convenience