Reserve Bank of India

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Reserve Bank of India is also known as India's Central Bank. It was established on 1st April 1935. Although the bank was initially owned privately, it has been taken up the Government of India ever since, it was nationalized. The bank has been vested with immense responsibility of reviewing and reconstructing the economic stability of the country by formulating economic policies and ensuring a proper exchange of currency. In this regard, the Reserve Bank of India is also known as the banker of banks.

Preamble of the Reserve Bank of India

" regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage."

The Preamble of the RBI speaks about the basic functions of the bank. It deals with the issuing the bank notes and keeping reserves in order to secure monetary stability in the country. It also aims at operating and boosting up the currency and credit infrastructure of India.

Legal Functions of the RBI

Given below are the following functions of the RBI:-
  • Umbrella Acts
  • Reserve Bank of India Act, 1934
  • Banking Regulations Act, 1949

Other RBI Acts

Given below is the list of other RBI Acts that authorizes the bank to govern and control the economic functions of the other banks operating within the country:-

Specific Functions
  • Public Debt Act, 1944 or Government Securities Act
  • Securities Contract (Regulation) Act, 1956- This Act regulates the securities market of the government
  • Indian Coinage Act, 1906- It governs currency and coins
  • Foreign Exchange Regulation Act, 1973/Foreign Exchange Management Act, 1999- It governs trade and foreign exchange market
Banking Operations
  • Bankers' Books Evidence Act
  • Banking Secrecy Act
  • Negotiable Instruments Act, 1881
  • Companies Act, 1956 - This Act enables the RBI to govern banks as companies
  • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980- It is related to the nationalization of banks
Rights related to Individual Institutions
  • The Industrial Development Bank (by the Transfer of Undertaking and Repeal) Act, 2003
  • The Industrial Finance Corporation (by the Transfer of Undertaking and Repeal) Act, 1993
  • State Bank of India Act, 1954
  • National Bank for Agriculture and Rural Development Act
  • National Housing Bank Act
  • Act related to the deposit Insurance and Credit Guarantee Corporation

Main Functions of the Reserve Bank of India

Monetary Authority:
The Reserve Bank of India takes a leading role in formulating, implementation and monitoring the monetary policy. One of the major functions of the bank is to maintain price stability and ensure sufficient flow of credit to the industrial sectors that are prospering in the country

Regulating & Supervising the Financial system:
The Reserve Bank of India lays down guidelines for proper and sound banking within the nation's economic and banking framework. Apart from this, The RBI also ensures the interest of the depositor by providing cost effective banking services.

Managing Foreign Exchange (FOREX):
Under the Foreign Exchange Act of 1999, RBI ensures that external trade is facilitated along with a proper flow of payment, development and maintenance of the India's FOREX market.

Issues Currency:
This is one of the most important functions of the RBI. It is in full control of issuing, circulating, exchanging or destroying unfit currency from time to time along with maintaining a fresh and adequate supply of currency notes and coins.

Roles in Development:
The RBI strives to support national objectives and helps in fostering economic growth and stability in the country.

Other Functions:
The Reserve Bank of India is a banker to the GOI. In fact, it is also a banker to the banks. In this regard, the RBI undertakes and maintains the banking accounts of all other banks in the country.

Offices of the Reserve Bank of India

The RBI has 22 regional offices in the state capitals throughout the country. The other institutions that are undertaken by the RBI are:-
  • College of Agricultural Banking
  • Banker's Training College
  • Reserve Bank of India Staff College
  • National Institute of Bank Management
  • Indira Gandhi Institute of Development Research (IGIDR)
  • Institute for Development & Research in Banking Technology (IDRBT)
Address: Reserve Bank of India,
Central Office,
Shaheed Bhagat Singh Road,
Mumbai - 400001

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