RBI or Reserve Bank of India is known to be the central banking institution in India, which has the duty of controlling the monetary policy of the Indian currency rupee. Headquartered in the city of Mumbai, in the state of Maharashtra Reserve bank of India was founded in the year 1935 on 1st April, at the time of British rule in India. It was formed according to the provisions present in the reserve bank of India act of 1934, based on the recommendation of the Hilton young commission. After India’s independence in the year 1947, reserve bank of India was nationalized in the year 1949. Before that Reserve Bank of India was privately owned.
Before the existence of RBI the functions of RBI was performed mainly the government of India and to some extent by the imperial bank of India.
The main task given to reserve bank of India is to regulate the issue of banknotes, as well as exchanging or destroying the currency notes and coins if they are not fit for circulation; maintain reserves with a view to attaining monetary stability and to operate the currency and credit system of the country to its advantage. Other functions includes: managing the foreign exchange of the country; maintaining banking accounts of all scheduled banks; and performing the task of merchant banking for the state as well as the state governments and act as their banker too. Reserve bank of India also plays a very important role in the country’s government’s development strategy. Being a member bank of the Asian clearing union, the administration, direction and general superintendence of RBI has been entrusted on a strong central board of directors consisting of twenty one members, namely the governor, two governors- deputy, ten directors that are nominated by the government to represent crucial elements from economy of India, two representative of finance ministry and four director representative of local boards of the four metros: Kolkata, new Delhi Mumbai and Chennai. Apart from being an active promoter of financial inclusion policy of India RBI is also a leading member of the Alliance for Financial Inclusion.
RBI is also named as the ‘Bank of the Bankers’, and it has been a long and tough journey of consolidation, evolution, policy change & reforms that has actually shaped the institution. It did not happen in a day.
RBI, the oldest central banks in the developing countries, today has established itself to an institution with a difference that works with the goal of active development to the country’s advantage along with importance for agriculture and rural sectors of the country of India.