Why did RBI have to change its role from controller to facilitator of financial sector in India? | Learn NCERT solution | Education portal Class 11 Indian Economic Development | Study online Unit-3 Liberalisation, Privatisation and Globalisation





Q.3:- Why did RBI have to change its role from controller to facilitator of financial sector in India?

 

Answer:-
There was a substantial shift in role of the RBI from ‘a regulator’ to ‘a facilitator’ of the financial sector. Earlier as a regulator, the RBI would itself fix interest rate structure for the commercial banks. After liberalisation in 1991, RBI as a facilitator would only facilitate free play of the market forces and leave it to the commercial banks to decide their interest rate structure. Thus, with liberalisation competition prevails rather than controls.