Reserve Bank of India was established on April 1, 1935, under the Reserve Bank of India Act 1934. Initially, the central office was located at Calcutta and then moved to Mumbai in 1937.
As per RBI Act 1934, the functions of Reserve Bank of India are
- 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
The Reserve Bank of India is governed by the central board of directors. The board is appointed by Government of India under RBI Act.
Formulates, implements and monitors the monetary policy. Maintaining price stability while keeping in mind the objective of growth.
Regulator and supervisor of the financial system
Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
Maintains public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public
Manages the Foreign Exchange
Facilitates external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
Issuer of currency
Issues and exchanges or destroys currency and coins not fit for circulation. To give the public an adequate quantity of supplies of currency notes and coins and in good quality.
Performs a wide range of promotional functions to support national objectives.
Banker to the Government
Performs merchant banking function for the central and the state governments; also acts as their banker.
Banker to banks
Maintains banking accounts of all scheduled banks.
Subsidiaries of RBI
- Deposit Insurance and credit guarantee corporation of India (DICGC).
- Bharatiya Reserve Bank Note Mudran Private Limited.
- National Housing Bank.
- Reserve Bank Information Technology Private Limited.