Reserve Bank of India
- It is the Central Bank of thy country.
- The Reserve Bank of India was established in 1935 with a capital of Rs. 5 crore. This capital of Rs. 5 crore was divided into 5 1akh equity shares of Rs. 100 each.
- In the beginning the ownership of almost' all the share capital was with the non-government shareholders.
- In order to prevent the centralisation of the equity shares in the hands of a few people, the Reserve Bank of India was nationalised on January 1,1949.
- The general administration and direction of RBI is managed by a Central Board of Directors consisting of 20 members which includes 1 Governor, 4 Deputy Governors, 1 Government official appointed by the Union Government of India to give representation to important stratas in economic life of the country.
- Besides, 4 directors are nominated by the Union Government to represen local boards.
- Apart from the central board there are 4 local boards also and their head offices are situated in Mumbai, Chennai, Kolkata and New Delhi. 5 members of local boards are appointed by the Union Government for a period of 4 years.
- The local boards work according to the instructions and orders given by the Central Board of Directors, and from time to time they also tender useful advice on important matter.
- The head office of Reserve Bank of India is in Mumbai. At present Dr. D. Subbarao is the Governor of Reserve Bank of Inedia.
- Function of Reserve Bank
1. Issue of Notes - The Reserve Bank has the monopoly of note issue int he the country. It has the sole right to issue currency notes of various denominations except one rupee note. The Reserve Bank acts as the only source of legal tender money because the one rupee note issued by Ministry of Finance are also circulated through it. The Reserve Bank has adopted the Minimum Reserve System for the note issue. Since 1957, it maintains gold and foreign exchange reserves of Rs. 200 crore, of which at least Rs. 115 crore should be in gold.
2. Banker to the Governmet - The second important function of the Reserve Bank is to act as the Banker, Agent and Adiser to the Government. It performs all the banking functions of the State and Central Government and it also tenders useful advice to teh Government on matters related to economic and monetary policy. It also manages the public debt for the Government.
3. Banker's Bank - The Reserve Bank performs the same function for the other banks as the other banks ordinarily perform for their customers. It is not only a banker to the commercial banks, but is is the lender of the last resort.
4. Controller of Credit - The Reserve Bank undertakes the responsibility of controlling credit created by the commercial banks. To achieve this objective it makes extensive use of quantitative and qualitative techniques to control and regulate the credit effectively in the country.
5. Custodian of Foreign Reserves- For the purpose of keeping the foreign exchange rates stable the Reserve Bank buys and sells the foreign currencies and also protects the country's foreign exchange funds.
6. Other Functions- The bank performs a number of other developmental works. These works include the function of clearing house arranging credit for agriculture (which has been transferred to NABARD) collecting and publishing the economic data, buying and selling of Government securities and trade bills, giving loans to the Government buying and selling of valuable commodities etc. It also acts as the representative of Government in I.M.F. and represents the membership of India.
- Rs. 1000 Note is in Circulation - After a long span of 22 years, RBI released Rs. 1000 currency note for circulation on October 9, 2000. This note of size 177 x 33 mm contains the figure of Gandhiji on its water mark. In 1978, RBI had withdrawn the currency notes of Rs. 1000 and above from circulation to put a check on black money in the economy.