Reserve Bank of India and RBI has an important role to play in regulating & managing this segment. RBI manages forex and gold reserves of the nation. On a given day, the foreign exchange rate reflects the demand for and supply of foreign exchange arising from trade and capital transactions. The RBI's Financial Markets Department (FMD) participates in the foreign exchange market by undertaking sales / purchases of foreign currency to ease volatility in periods of excess demand for/supply of foreign currency. Reserve bank of India is the sole body who is authorized to issue currency in India. The bank also destroys the same
Reserve Bank of India Act, 1934 manage public debt. The Section 22 says that only RBI has the exclusive rights to issue currency notes in India. The Section 24 states that the maximum denomination a note can be . The section 26 of Act, describes the legal tender character of Indian bank notes. The Section 28 allows the RBI to form rules regarding the exchange of damaged and imperfect notes. The Section 31 says that in India only the RBI or the central government can issue and accept promissory notes that are payable on demand. However, cheque, that are payable on demand, can be issued by