The RBI, as a Central Bank of the Country has assumed greater responsibility as developmental and promotional agency. Its promotional functions and activities have been mainly directed towards building up and strengthening financial infrastructure and filling the institutional gap by setting up new financial institutions and by ensuring the allocation of credit in the socially desired directions. The Development and Promotional functions of the Central Banks are listed below:

(a) To promote and strengthen commercial banking in our country by taking various steps such as putting regulation on banks, setting up of deposit insurance corporation, amalgamation and consolidation of banks.

(b) To promote agricultural and rural credit by setting up and developing key financial institutions like NABARD and RRBS.

(c) To promote short, medium and long term industrial finance by setting up various institutions such as IDBI, SIDBI, SFCs, SSIDC etc.

(d) To promote exports through refinance to banks against export credit.

(e) To maintain internal price and exchange rate stable.

(f) To promote the market for investments in Govt. securities.

(g) To promote housing finance by promoting the national housing bank in 1988 to organise and augment resources for housing.

(h) To promote co-operative banking by providing funds to co-operative banks.

(i) RBI also encourages and promotes research in the areas of banking.