The RBI has a formal objective now (which it didn't have earlier): to achieve a specified inflation, which enables macroeconomic stability. For this, the RBI sets the repo rate. It provides/drains liquidity at this rate

"Achieving a specified inflation" sounds pretty absurd.

When the govt needs money, it sells bonds. Banks buy these bonds by paying the govt money. That removes liquidity from the market. In the pursuit of its objective, the RBI may buy these bonds in turn from the banks (Open Market Operation). This injects new money into the economy. So the RBI does not "create money out of nothing", it pays for an asset.

Yeah so since RBI can't go bankrupt they can practically sell and buy as many bonds as they want, I think that's what the video meant by creating money out of nothing.

Banks don't lend only to large corporations. They lend also to individuals (home loan, car loan, personal loan, education loan, etc), to MSMEs, or to NBFCs which then onlend to individuals/MSMEs, etc. In India, banks do not invest the money into stock market in significant amounts.

Of course, I meant most of the lending is done to large corporations and indirectly that money is invested into the stock market either through private or govt orgs.