RBI: Establishment, Structure and Functions
When and how the Reserve Bank of India was set up, how it is governed, and its main functions - note issue, banker to the government and to banks, monetary policy, regulation and supervision, foreign-exchange and payment-system oversight, and development roles.
What you will be able to do
- State the statute, year of establishment and year of nationalisation of the RBI.
- Describe the Central Board and the Governor's role in RBI governance.
- List the RBI's traditional and developmental functions.
- Explain what 'lender of last resort' and 'currency authority' mean in practice.
What is inside this lesson
- 1Establishment
- 2How the RBI is governed
- 3Traditional functions
- 4Regulatory, supervisory and market functions
- 5Developmental and promotional functions
- 6Common confusions
- 7Quick revision
- 8Worked example: which RBI function
- 9Practice
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Establishment
The Reserve Bank of India was constituted under the Reserve Bank of India Act, 1934 and began operations on 1 April 1935. It was set up on the recommendations of the Hilton Young Commission (the Royal Commission on Indian Currency and Finance).
The RBI started as a privately owned shareholders' bank. It was nationalised on 1 January 1949 under the Reserve Bank (Transfer to Public Ownership) Act, 1948, and has been wholly owned by the Government of India since. Its central office was originally in Kolkata and was moved permanently to Mumbai in 1937.
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