Question

Why money is issued only by RBI not other institutions or organisations?

Answer 1

Explanation:

The Reserve Bank of India (RBI) is India's central bank, which controls the issuance and supply of the Indian rupee. RBI is the regulator of entire Banking in India. RBI plays an important part in the Development Strategy of the Government of India.

RBI regulates commercial banks and non-banking finance companies working in India.It serves as the leader of the banking system and the money market.It regulates money supply and credit in the country.The RBI carries out India's monetary policy and exercises supervision and control over banks and non-banking finance companies in India. RBI was set up in 1935 under the Reserve Bank of India Act,1934.

Answer 2

The whole concept of currency is backed by the only word - “TRUST”. If that trust is broken; currency notes are just piece of paper. So, if every bank starts printing currency, it'll be very difficult to manage. That will be a total chaos.

RBI is the single unit which maintain this trust. It's job is to control the supply of currency in India so that economy runs smoothly because if there is more currency in market then it's value will decrease which results INFLATION and if currency is short in supply then DEFLATION. This is not possible if there are a lot of banks printing currencies, so it's very important to give this responsibility to a single bank.

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