1. CENTRAL BANKS
 It stands as the lender of the money
 Bank of England is the oldest in the world
 Nearly 150 Central Banks are operating in the world
 RBI in India was started in 1935
 Three presidency banks were amalgamated to form
RBI

2. MEANING OF CENTRAL BANK
 It is an institution charged with the responsibility of
managing the expansion and contraction of the volume
of money in the interest of general public welfare.
 It is the bank which controls the credit
 Central bank is called bankers bank
 The need was proposed by Hilton Young commission in
20th Century

3. OWNERSHIP OF RBI
 RBI was constituted as a shareholder’s bank.
 Share Capital – 5 crores divided into 5 lakh shares
of Rs. 100 each
 Rs. 2,30,000 by RBI, remaining by Private
Shareholders.
 From 1st January 1949, RBI was nationalized

4. NEED / FUNCTIONS / OBJECTIVES FOR
CENTRAL BANKS
 Direction and Regulation
 Issue Currency Notes
 Foreign Exchange Reserve
 Banker to the Government
 Banker’s bank
 Control of Credit

5. NEED / FUNCTIONS / OBJECTIVES FOR
CENTRAL BANKS
 Monopoly Power of note-issue
 Maintain value of currency
 Maintain stable interest rate / Exchange Rate
 Advisor to the Government
 Promotional and developmental functions

6. UNSUCCESSFUL FUNCTIONS OF RBI
 No control over inflation
 No uniformity in interest rates
 No link with indigenous banking
 Banking problems
 Failure of Bill Market
 Failure in Agricultural Finance

7. FORBIDDEN FUNCTIONS OF RBI
 It cannot work in the field of trade and industry
 It cannot grant loans directly to the customers
 It cannot give interest on deposits
 It cannot purchase the shares of any company
 It can only buy the negotiable instruments from CB
 It cannot give loan on the security of any movable
property

8. ORGANIZATION STRUCTURE
 Total Members – 20
 1 Governor (Chairman) and 4 Deputy Governor
appointed by Central Government for 5 years
 4 Directors for 4 years
 10 other directors for 4 years
 1 Government official

9. DEPARTMENTS OF RESERVE BANK
 Issue Dept.
 Banking Dept.
 Exchange Control Dept.
 Dept. of Banking operations and Development
 Industrial Finance Dept.
 Research and statistics Dept.
 Legal Dept.
 Dept. of finance / Accounts
 Dept. of Administration
 Inspection Dept.
 Secretarial Dept.