Which among the following is not regarded as a normal function of the Reserve Bank of India (RBI) within the Indian financial system?

Introduction / Context:
The Reserve Bank of India (RBI) is the central bank of the country and performs a wide range of functions related to currency, credit, and financial stability. Exam questions often ask which functions belong to the RBI and which do not, because this helps distinguish the role of a central bank from that of commercial banks. This question asks you to identify the function that is not considered a normal role of the RBI.

Given Data / Assumptions:

• The options describe different possible roles: managing debt of other banks, acting as monetary authority, serving as banker to governments, and issuing bank notes.
• We assume knowledge of the core functions of the RBI as given in economic textbooks.
• The key is to distinguish functions relating to the state and the financial system from functions relating to individual commercial banks.

Concept / Approach:
The RBI has several major functions: it acts as the monetary authority and formulates and implements monetary policy, it is the banker to the central and state governments, it issues and manages currency notes, it acts as a banker's bank, and it maintains financial stability. However, the RBI does not act as a debt manager to individual commercial banks in the sense described in the option. It may provide liquidity support and act as lender of last resort, but managing debt of other banks is not described as a primary or normal function.

Step-by-Step Solution:
Step 1: Recognise that formulating and implementing monetary policy is a core function of the RBI as monetary authority.Step 2: Recall that RBI serves as a banker to the Government of India and state governments, managing their accounts and some aspects of public debt.Step 3: Remember that RBI has the sole right to issue bank notes in India, making currency issuance one of its central responsibilities.Step 4: Consider the option about serving as debt manager to other banks. RBI may regulate and supervise banks, but managing their individual debts is not a standard listed function.Step 5: Therefore, the statement about serving as debt manager to other banks is the one that does not fit the normal description of RBI functions.

Verification / Alternative check:
Lists of RBI functions in standard Indian economy textbooks and official RBI documents mention currency issuance, government banking, regulation and supervision, development roles, and monetary policy. They do not list debt management for other banks as a core function. Although RBI may involve itself in resolution of stressed banks or provide emergency lending, this is different from a routine debt management role.

Why Other Options Are Wrong:
To work as monetary authority and implement its Monetary Policy: This is a primary function of the RBI and central to its role in managing inflation, credit, and liquidity.

Serve as banker to central and state governments: RBI manages government accounts, facilitates payments, and helps in public debt management, which is a standard function.

To serve as issuer of bank notes: RBI has the monopoly of note issue in India, making this one of its most important functions.

Common Pitfalls:
Some students misinterpret the RBI role of banker's bank and think it includes detailed debt management for each commercial bank. In reality, RBI provides liquidity facilities, supervision, and regulation, but banks manage their own debt portfolios. Keeping this distinction in mind helps in selecting the correct answer.

Final Answer:
The function that is not regarded as a normal role of the RBI is serving as debt manager to other banks.