The bank was established on April1, 1935 in Kolkata according to the Reserve Bank of India act 1934 but was later shifted to Mumbai in 1937.
RBI was initially privately owned but since nationalization in 1949, the Reserve Bank is owned by the Government of India. The Governor sits in Central Office where policies are formulated.
The preamble of the reserve bank of India is as follows:
"...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."Central Board
A central board of directors governs all the affairs of Reserve Bank. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. The members of RBI are appointed or nominated for a period of four years.The board constitutes full time Governor and upto four deputy Governors as the official directors and non-official directors nominated by Government includes its one official and ten directors from various fields.
Among others four directors from each of the four local boards are also appointed. These members provide general superintendence and direction in the Bank's affairs.
Local Boards
The four local boards are located in four regions of the country in Mumbai, Calcutta, Chennai and New Delhi. Each of the local board consists of five members each. These members are appointed by the Central Government for a term of four years.These members advise the Central Board on local matters and represent territorial and economic interests of local cooperative and endemic banks, to perform functions as designated by Central Board from time to time.
Functions
- It formulates, implements and monitors the financial policies of India. It maintains the price stability and ensures adequate flow of credit to productive sectors.
- The Reserve bank suggests parameters of banking operations for the country's banking and financial system functions. The aim is to maintain public confidence in the system, protect the interest of depositors and provide cost-effective banking solutions to the public.
- The Reserve bank promotes external trade and payment and orderly development and maintenance of foreign exchange market in India as per the Foreign Exchange Management Act, 1999.
- RBI issues currency and coins and exchanges or destroys the currency and coins that are not in circulation.
- RBI provides loan to the central and the state governments whenever they are in need so it acts as merchant banker.
Some Interesting Facts about RBI
- The RBI logo was actually inspired from the East India Company Double Mohur.
- RBI was formed on April 1, 1935. It was started as private entity, however changed to government entity now.
- Nationalization of the central bank was started after 1949.
- The financial year of RBI is from 1 July to 30 June.
- RBI is responsible for printing the currency notes but the minting of coins is done by the Government of India.
- The first woman deputy governor of RBI is K. J. Udeshi in 2003.
- Demonetized notes: Denominations of five thousand rupees (Rs. 5,000) and ten thousand rupees (Rs. 10,000) in 1938. They were reintroduced in 1954 and again demonetized in 1978. RBI can print these notes according to the RBI act of 1934.
- RBI was also the central bank for two other countriesu i.e in Pakistan till June 1948 and the Central Bank of Burma ( Myanmar) till April 1947.
- The bank was established on the recommendation of the Hilton Young Commission.
- RBI does not have second class employees. It has 17000 Class I, Class III & Class IV employees.
- Manmohan Singh is the only Prime Minister to have also served as the Governor of RBI.
- Mr. C.D. Deshmukh was the first Indian to hold the position of the Governor of RBI was . He was the third governor of RBI.
- RBI has 29 offices in India, located in the state capitals.
- RBI Monetary Museum is located in Mumbai head office.
