• One of the primary functions of the Reserve Bank of India (RBI) is liquidity management, which is done through Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR) (in the long term), Open Market Operations (medium term) and Liquidity Adjustment Facility (short term).

• The RBI can set lending limits on banks, as is done in Priority Sector Lending.

• Under Prompt Corrective Action framework, the RBI is allowed to put certain restrictions, such as halting branch expansion, stopping dividend payment, cap lending limit to a sector, etc.

• Under SLR requirements, the banks have to invest a part of their time and demand liabilities in government securities, gold or cash. Thus, a minimum amount is invested in the government securities under SLR requirements.

• In accordance with the Fiscal Responsibility and Budget Management (FRBM) Act, the RBI cannot print currency to supply credit to the government.

• In accordance with Section 47 of the RBI Act, the surplus (profits made by the RBI) should be transferred to the Government of India.