This paper deals with the electronic structure of RbSr, a molecule possessing both a permanent magnetic and electric dipole moment in its own frame allowing its manipulation with external fields. Two complementary ab-initio approaches are used for the ground and lowest excited states: first, an approach relying on optimized effective core potentials with core polarization potentials based on a full configuration interaction involving three valence electrons, and second, an approach using a small-size effective core potential with 19 correlated electrons in the framework of coupled-cluster theory. We have found excellent agreement between these two approaches for the ground state properties including the permanent dipole moment. We have focused on studies of excited states correlated to the two lowest asymptotes Rb(5p 2 P )+Sr(5s 2 1 S) and Rb(5s 2 S)+Sr(5s5p 3 P ) relevant for ongoing experiments on quantum degenerate gases. We present also the Hund c) case potential curves obtained using atomic spin-orbit constants. These potential curves are an excellent starting point for experimental studies of molecular structure of RbSr using high-resolution spectroscopy.