INTRODUCTION It is the central bank of India Established in 1 April 1935 under the reserve bank of India act It head quarters is in Mumbai Its present governor is Dr. d.subbarao It was originally constituted as a shareholder’s bank with a capital of Rs.5 crores. The entire share capital was contributed private shareholders with the exception of the nominal value of Rs 2.2 lakh subscribed by the central bank After independence, the reserve bank of India was nationalized.
ManagementThe management of RBI is vested with the central board of directors comprising 20 members. The board consist of the following members; One governor and four deputy governor appointed by the central government Four directors nominated by the central government one from each of the local board Ten directors nominated by the central government One government official nominated by the central government
Functions of the reserve bank Note issue Banker to government Custodian of foreign exchange reserve banker’s bank Bank of settlement and clearance Information and research functions Lender of last resortController of credit
R B I has the monopoly power to issuecurrency notes of all denominations exceptone rupee notes and coins. One rupee notesnotes and coins are issued by government ofIndia.
The reserve bank acts as a banker tothe central and state governments. The termand conditions on which the reserve bankacts as a banker to the governments are setout in separate agreements entered into bythe reserve bank with the central and stategovernments.
In India R B I is acting as custodian of foreignexchange reserve. The reserve bank of Indiahas responsibility of maintain the externalvalue of the rupee. For this purpose, the bankholds most of the nations foreign exchangereserve
RBI is acting as banker to commercial banks and other financial institutions working in India. The reserve bank of India has the responsibility for developing an adequate and sound banking system for catering to the needs of trade, commerce and agriculture. all commercial banks in India are required to open an account with RBI. Every bank wishing to commence banking business in India most obtain a license from the reserve bank in terms of section22 of the banking regulations act.
As the reserve bank keeps the cash balance of all commercial banks it is easy for the bank to act as settlement bank or clearing house for other banks.
The reserve bank undertakes collection and dissemination of information and conducts research in this field. The bank issues several periodical publications, which attempt to explain and assess the significance of economic developments in the country
As a lender of the last resort, RBI provides financial accommodation to the commercial banks in times of financial crisis.
Control of credit is one of the most important functions of RBI. RBI performs this task with twin objectives of checking inflation and providing sufficient credit for the economic development of the country following are the various weapons of credit control used by RBIo Bank rate policyo Variable cash reserve ratioo Variation of statutory liquidity ratioo Open market operation