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The Reserve Bank of India regulates day to day operations of commercial banks through monetary instruments like bank rates, open market operations and cash reserve ratios.
It oversees, manages, and keeps an eye on the operations of the banks. The percentage of cash that must be kept on hand by banks out of customer deposits is governed by guidelines set by the RBI. The RBI ensures that commercial banks lend to a variety of demographics. For instance, it ensures that the banks lend to big businesses and segments such as farmers and artisans. The banks routinely submit reports to the RBI detailing their lending practices and interest rates. As a result, the RBI manages the banks through supervision and surveillance.

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