RESERVE BANK OF INDIA

Introduction

RBI is the Central Bank of India Established in 1934
under the RESERVE BANK OF INDIA ACT 1934.
RBI head quarter located in Mumbai (Maharashtra).
The present governor is Duvvuri Subbarao.
RBI has 26 offices out of which four are regional
offices located in metropolitan cities.
Breif History
RBI was set up on the recommendations of the Hilton
Young Commission .
It was started as share-holders bank with a paid up
capital of INR 5 crores.
Initially it was located in Kolkata. It moved to Mumbai
in 1937.
Earlier RBI was privately owned later on in 1949, the
bank was nationalised and is fully owned by the Govt.
of India.

Preamble
The Preamble of the Reserve Bank of India describes
the basic objectives of the Reserve Bank as

"...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."

Organization of The RBI
The Reserve Bank's affairs are governed by a central board of
directors and four local boards of directors.
The central board performs the functions of general
superintendence and direction of the banks affairs.
Central board: Appointed/nominated by the GOI for a time period of
four years. It includes the following
Official directors
A. Full-time : Governor and not more than four Deputy Governors
Non-official directors
A. Nominated by Government: Ten Directors from various fields
and two government officials
B. Others: Four directors - one each from four local boards


Organization of The RBI
Local board
Functions : To advise the Central Board on local matters and
to represent territorial and economic interests of local
cooperative and indigenous banks.
One each for the four regions of the country in Mumbai,
Calcutta, Chennai and New Delhi
Membership:
A. consist of five members each
B. appointed by the Central Government
C. for a term of four years
Functions of RBI
Monetary Authority:
A. Formulates, implements and monitors the monetary policy.
B. Objective: maintaining price stability and ensuring adequate
flow of credit to productive sectors.
Regulator and supervisor of the financial system:
A. Prescribes broad parameters of banking operations within
which the country's banking and financial system functions.
B. Objective: maintain public confidence in the system, protect
depositors' interest & provide cost-effective banking services.
Manager of Foreign Exchange
A. Manages the Foreign Exchange Management Act, 1999.
B. Objective: to facilitate external trade and payment and
promote orderly development and maintenance of foreign
exchange market in India.








Functions of RBI
Issuer of currency:
A. Issues and exchanges or destroys currency and coins not fit for
circulation.
B. Objective: to give the public adequate quantity of supplies of
currency notes and coins and in good quality.
Developmental role
A. Performs a wide range of promotional functions to support
national objectives.
Related Functions
A. Banker to the Government: performs merchant banking
function for the central and the state governments; also acts
as their banker.
B. Banker to banks: maintains banking accounts of all scheduled
banks.

Conclusion
RBI has done commendable job as a monetary authority and
regulator of the financial system.
It has adopted the best international practices in the dissemination
of information and rational of policies(i.e., the extent of information
disclosed helps market to make its own projections of interest
rates).
The bank intervened in markets where necessary and allowed the
market participation to build skills and gain maturity to accept the
new system.
It has adopted a consultative and participative approach to
introduce changes.
The RBI has managed foreign exchange resources effectively.