RBI Supervision, Globalisation Effects and Caste Politics in India

Posted on Jan 3, 2026 in Economy

Economics

Reserve Bank of India Supervision

The Reserve Bank of India supervises the functions of banks in several ways:

  • Reserve requirements: Commercial banks must hold a portion of their cash as a reserve with the RBI. The RBI ensures that banks maintain a minimum cash balance from the deposits they receive.
  • Directed lending and inclusion: The RBI monitors that banks grant loans not only to profit-making business owners and traders, but also to small industries, small-scale cultivators, and small borrowers.
  • Reporting and transparency: Commercial banks must submit complete information to the RBI about how much they are lending, to whom, and at what interest rates. This reporting is required to help ensure equality in the economy and to protect small depositors, farmers, small-scale industries, and small borrowers.

These measures promote financial stability and inclusion. In this process, the RBI acts as the lender of last resort to banks.

Factors Enabling Globalisation

1. Technology

  • One of the primary factors that has accelerated globalisation is rapid technological advancement. Technology has enabled much faster and more cost-effective distribution of goods over long distances.
  • Advances in information and communication technologies have made information readily accessible.

2. Trade Liberalisation

Trade barriers are government-imposed restrictions that can control or limit international trade; examples include import taxes. Liberalisation is the process of removing such government-imposed trade obstacles or limitations. A government is said to be more liberal when it imposes fewer restrictions than before.

Impact of Globalisation in India

  • MNCs have shown interest in urban industries such as cell phones, automobiles, electronics, soft drinks, fast food, and banking.
  • Consumer demand for these goods has grown, and new employment has been created in these industries and services.
  • Local businesses supplying these sectors with raw materials and other necessities have prospered.
  • Many firms have improved production standards by investing in modern technologies and production methods.
  • Some businesses have benefited from successful partnerships with international enterprises.

Political Science

Caste in Politics

In politics, caste can take many forms:

  1. When political parties choose candidates or form governments, they often ensure representation of members from many castes and tribes.
  2. To win elections, political parties and politicians sometimes appeal to caste sentiment.
  3. Political parties emphasise caste-based issues during elections to obtain political support, because the ‘one person, one vote’ system (adult franchise) has made voters more influential.
  4. People from lower castes have become more aware of their voting rights and political influence as a result of party mobilisation.

Politics Shaping Caste Identities

The caste system and caste identities are also transformed by political processes since they are brought into the political arena. Examples include:

  1. Each caste group may aspire to grow in size by absorbing neighbouring castes or sub-castes.
  2. Various caste groupings form and then engage in communication and negotiation with other castes or communities.
  3. New political caste categories have emerged, such as ‘backward’ and ‘forward’ caste groupings.

As a result, caste plays a variety of functions in politics. Caste divisions can lead to tensions, conflict, and even violence in some circumstances.