<P> Under this measure RBI try to persuade bank through meetings, conferences, media statements to do specific things under certain economic trends . For example, when RBI reduces repo rate, it asks banks to reduce their base rate as well . Another example of this measure is to ask banks to reduce their Non-performing assets (NPAs). </P> <P> In developing countries like India, Monetary Policy fails to show immediate or no results because of below factors: </P> <Ol> <Li> People do not employ alternative investment options . A large section of society still depends on saving accounts, fixed deposits, Public Provident Fund for investment . Commercial banks have large deposits . RBI is not the main or even prominent money supplier for these banks . So whatever monetary action central bank takes has little or late impact on the economy . </Li> <Li> Many people in rural areas are out of banking net and whatever RBI does has no impact on their financial activities . </Li> <Li> Monsoon uncertainty adversely affects food production and thereby cause food inflation . Monetary Policy has no impact on food inflation . </Li> </Ol> <Li> People do not employ alternative investment options . A large section of society still depends on saving accounts, fixed deposits, Public Provident Fund for investment . Commercial banks have large deposits . RBI is not the main or even prominent money supplier for these banks . So whatever monetary action central bank takes has little or late impact on the economy . </Li>

Explain the roles and function of reserve bank of india in detail