Why is this ring used near the Crankset? I couldn't comprehend, why this ring is needed. Please refer the pictures. Its a road bike (I am not sure if it matters or not, so felt like mentioning it).





In my Bicycle, this ring usually comes out loose, Should I be worried and get it replaced?

Edit: Its an old bike, I have myself rode on this one for nearly a 3K miles so far, since I bought it from a person who had been using it. The model might go down to be roughly 7-8 years old. Nonetheless, I love this one.

P.S.: Pardon me for poor quality of the images.
You have an older pre-cartridge bottom bracket. The bottom bracket is the axle and bearing assembly for the crankset. Rather than sealed bearings it has either loose ball or caged bearings. While the bottom bracket is assembled  the cup is adjusted to the correct preload. Preload determines how much movement there is between the bearings and the axle. It should be adjusted so there is a minimum free-play but still spins freely. Once the adjustment is made the ring is tightened to hold the adjustable cup in the correct position.