The Reserve Bank of India (RBI), the country's central financial institution, is in charge of the issuance and supply of the Indian Rupee and effectively manages the nation's primary payment systems. Formed under the Reserve Bank of India Act in April 1935, the RBI's central aim as per the Act is to govern the issuance of bank notes, ensure India's monetary stability, and operate the country's currency and credit system to its benefit.

The RBI accomplishes its goals by following a disciplined monetary policy aimed at maintaining price stability, thereby fostering economic growth. The inflation target, decided in alliance with the Government, has been one of the key directives of its policy. Since the year 2016, this target has stood at 4%, allowing a tolerance of 2% in either direction.

The RBI also assumes a substantial role in overseeing and managing the Indian financial system, which includes prescribing broad parameters of banking operations within which the country's banking and financial system functions. Furthermore, the Bank's role in managing foreign exchange under the Foreign Exchange Management Act, 1999 is pivotal, as it facilitates external trade and payment to promote the development and maintenance of foreign exchange market in India.

Additionally, the RBI plays a considerable part in promoting financial inclusion in the country and fosters it by prescribing guidelines for priority sector lending. Its role extends to managing government accounts, including the issuance of debt.