Reserve Bank of India: Origin, History, and Functions

The Reserve Bank of India is the central bank of India and is dependent on the multidimensional part. It performs critical financial functions ranging from the issuance of cash notes to the preservation of the country's monetary soundness. Initially, the Reserve Bank of India was a private shareholder's company that was nationalized in 1949. Its issues are administered by the Central Board of Executives designated by the Government of India. Since its initiation, the Reserve Bank of India has played a critical role in the financial improvement and soundness of the country.

Reserve Bank of India Before Independence

The Royal Commission on Indian Currency and Finance, designated on August 25, 1925, proposed the establishment of the Central Bank of India. The Indian Central Banking Enquiry Committee, 1931, stressed the foundation of the Central Bank in India. The Reserve Bank of India was set up on April 1, 1935, under the Reserve Bank of India Act, 1934. The primary goal of the Reserve Bank of India is "to direct the issue of bank notes and the keeping of reserves with the goal of securing money-related solidity in India and, for the most part, to function the nation's money or credit framework to its advantage."

The Reserve Bank of India was set up as a private shareholder's bank. The Central office of the Reserve Bank of India was at first found in Calcutta, which was later moved to Bombay. The Reserve Bank of India issued its first money notes in January 1938 in denominations of Rs. 5 and Rs. 10, followed by Rs. 100, Rs. 1000, and Rs. 10000 the following year.

Reserve Bank of India After Independence

The Reserve Bank of India was nationalized in the year 1949 through the Reserve Bank (Transfer of Public Ownership) Act, 1948, and all offers were exchanged with the Central Government. The Reserve Bank of India is constituted for the administration of money and for carrying on the trade of keeping money in accordance with the arrangements of the Act. It could be a body corporate with infinite progression, a common seal, and the ability to sue or be sued in its title. The common supervision and course of the issues of the Reserve Bank are dependent on the Central Board of Directors.

The composition of the Central Board

The Central Board comprises of −

• A Governor,

• A delegate, a representative,

• Ten Chief designated by the Central Government and

• Two government officials are designated by the Central Government.

The appointee Governor and Executive are qualified to attend the Central Board assembly but do not have the right to vote. The Representative and Delegate Senator hold office for a term of five years and are entitled to re-appointment.

Functions of the Reserve Bank of India

It includes −

Government’s Bank

The Reserve Bank of India acknowledges and makes an installment for the sake of the Central Government. It handles the Government’s trade, settlement, administration of open obligations, and other keeping money work of the central government. The Central Government endows its cash, settlement, trade, and keeping of money exchanges in India with the Reserve Bank of India. It bargains in repo or reverse repo.

Right to Issue a Bank Note

The Reserve Bank of India has the sole right to issue bank notes in India. The bank notes are lawful tender, ensured by the central government. The issue of bank notes is conducted by an isolated office called the issue office. The Central Government, on the suggestion of the Central Board, indicates the group of bank notes, counting the discontinuance of bank notes. The Central Government favors the plan, shape, and fabric of bank notes based on the suggestions of the Central Board.

Formulates Banking policy

The Reserve is tasked with defining and managing an account approach in the interest of the open or contributors' account approach in connection with progress and giving direction on the reason for the account approach, including the most extreme sum of development, the rate of interest, and terms and conditions for propelling or ensuring.

Licensing Authority

The Reserve Bank of India is engaged in giving a permit to a company to commence managing an account in India, including the control to cancel a permit allowed to a money company.

Banker’s Bank

The banks listed in the second schedule and non-plan banks should keep up a cash reserve proportionate with the Reserve Bank of India with a view to securing money related stability within the nation. It gives advances and progress in remote money to planned banks and to other budgetary institutions. It purchases, sells, or discounts any charge of trade or promissory note, or makes a credit, or propels to plan bank.

Depositor awareness and Education

The Reserve Bank of India has constituted a fund called, "Depositor Education and Awareness Fund." The support is utilized for the advancement of depositors’ interests and other purposes within the interest of the depositor. The Reserve Bank of India is enabled to direct, deny, and limit trade in remote areas. It issues permits to banks and other institutions to act as the authorized organization within the remote trade showcase.

Conclusion

The Reserve Bank of India is responsible for the nation's currency and financial stability. It defines and implements financial policy within the nation to preserve solidity and development within the economy. Its role as a banker's bank is critical to the smooth operation of the nation's managing an account segment. The Reserve Bank of India is reliant on a multifaceted role, and its role as a controller has been critical in previous global crises where Indian money keeping and the monetary framework remained solid with capital abundance and stability. In this way, considering the parts and capacities of the Reserve Bank of India, it can be named as one of the most crucial organizations in the Indian economy and a "super controller of the money sector."

Frequently Asked Questions

Q1. Whom do we call the father of the central bank?

Ans. Also known as bankers’ bank, the reserve bank of India is known as the father of the central bank.

Q2. Which bank first introduced the Credit cards in India?

Ans. Andhra bank was the first bank to introduce credit cards in India.

Q3. What are the major works of Reserve Bank of India (RBI)?

Ans. Major works of Reserve Bank of India are −

• RBI is government’s bank, so it helps government in its financial transactions.

• RBI regulates the nation’s monetary policy.

• RBI issues the Indian currency time to time.

• It maintains the nation’s credit system.

• It makes rules and regulation for all other banks doing business in India.