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Reserve Bank of India (RBI)

Reserve Bank of India (RBI) is the central bank of India. It is a statutory body established in 1935 under Reserve Bank of India Act, 1934, whose primary function is to manage and govern the financial system of the country.

Indian Currency Notes 

Reserve Bank regulates the issue and supply of Indian Rupee. It also looks after the government's money. The central bank plays the role of the banker's bank and regulates the banking sector. It also supports in India's development by supporting the government in its developmental projects and policies.

Major Functions of the RBI

The preamble of the RBI.."to 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; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth."

Basic Functions of RBI

  • Issuer of Currency notes: The RBI is the only institution which has the control over printing of currency notes (except, the One Rupee note, which is printed by the finance ministry)
  • Banker to the Government: The RBI performs banking functions for the state and central governments. It advises the government on monetary policy issues and also managed the government's public debt.
  • Banker's Bank: The RBI is also known as the Banker's bank, because it performs functions similar to what commercial banks do for their customers.
  • Credit Regulation: The RBI regulates the flow of money in the country's financial system. It controls inflation in the economy and take necessary policy decisions from time to time to address systemic concerns.
  • Foreign Reserves: The central bank buys and sells foreign currencies to keep the foreign exchange rates stable. It takes necessary steps as and when required.
  • Role in Development of the Country: The RBI performs various functions and takes necessary decisions to support developmental agenda of the government.
The RBI Board

The board of the RBI consists of a Governor, not more than four Deputy Governors and other members who are appointed by the central government.

Currently, Shaktikanta Das is the Governor of RBI.

When the RBI was established?

The RBI was established on 1st April 1935,with head office in Kolkata, following the Reserve Bank of India Act of 1934. Later it was shifted to Mumbai in 1937.

Originally, the bank was privately owned.However after Independence it was nationalised in 1949, and now is fully owned by the Ministry of Finance, Government of India.

Note: Contents published in this blog has been taken from various sources. A detailed study is recommended before using them in any medium.

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