About RBI

● It is owned by the Union Ministry of Finance.

● Current governor Shri Shaktikanta Das

History of RBI

Year Event

1926 Hilton Young Commission, recommended setting up a Central Bank

for India.

1934 Reserve Bank of India Act, 1934, passed which provides the
statutory basis for the functioning of the Bank.

1935 As per the provision of the RBI Act, the RBI was established in
Calcutta and commenced its operations on 1st April, 1935.

1937 In 1937, the RBI was permanently moved from Calcutta to

Mumbai, where its current Central Office is located.

1949 Nationalisation of RBI

Some Facts about RBI

First Governor - Sir Osborne Smith (1935-37)

First Indian Governor - CD Deshmukh (1943-49)

The emblem of the RBI is a Tiger and a Palm Tree.

Subsidiaries of RBI

a. Deposit Insurance and Credit Guarantee Corporation (DICGC)

● Established under the DICGC act 1961, on 15th July 1978

● All commercial bank including branches of a foreign bank in India, local
area bank and RRB are insured by DICGC
● NBFC and primary cooperative society are not insured by RBI
 ● DICGC insures all types of account i.e. (Current, fixed, saving, recurring )
● The maximum amount insured by DICGC is 5 lakh

b. Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)

● Prints banknotes for Reserve Bank of India (RBI)

● Established in 1995 to address the demand for banknotes
● It has two presses in Mysore and Salboni

c. Reserve Bank Information Technology Private Limited (ReBIT)

● To provide IT services and solutions to the RBI and its subsidiaries.

● Developing and maintaining IT infrastructure
● Implementing IT security measures

d. Indian Financial Technology and Allied Services (IFTAS)

● To promote the development of financial technology in India.

● Providing IT services to the financial sector
● Conducting research and development in financial technology
● Offering training programs in financial technology

e. Reserve Bank Innovation Hub (RBIH)

● To foster innovation in the financial sector and promote the adoption of new
technologies
● Supporting fintech startups
● Conducting research and development in financial technology
● Organising hackathons and other innovation events

Structure of RBI

● Established on 1st april 1935 by provisions of RBI Act 1934

● Nationalised on 1st jan 1949 based on RBI (Transfer to public ownership) act
1948
● Central office Mumbai
 ● It has offices in 33 locations.
● RBI board consists of 21 members (1+4+2+10+4) (Organisation
Structure)
➢ One governor
➢ Not more than 4 deputy governors
➢ 2 govt officials from Ministry of Finance
➢ 10 nominated directors from various fields by govt to give
representation to important elements in the economic life of the
country
➢ 4 nominated directors by Central govt to represent 4 local boards with
headquarters at Mumbai, Kolkata, Chennai and New Delhi
● Local board consists of 5 members appointed by CG for a term of 4 years to
represent territorial and economic interests.

Objectives of RBI

● To regulate issue of bank notes

● To maintain monetary stability such that the business and economic life of
the country can deliver the welfare gains of a mixed economy;
● To maintain financial stability and ensure sound financial institutions so that
economic units can conduct their business with confidence.
● To maintain stable payment systems, so that financial transactions can be
safely and efficiently executed
● To regulate overall volume of money and credit in the economy

Functions of RBI

1. Monetary Authority
● Formulates, implements and monitors the monetary policy.
● Objective: maintaining price stability while keeping in mind the
objective of growth.
2. Regulator and supervisor of the financial system:
● Prescribes broad parameters of banking operations within which the
country's banking and financial system functions.
● Objective: maintain public confidence in the system, protect
depositors' interest and provide cost-effective banking services to the
public.
3. Manager of foreign exchange
● Manages FEMA 1999
● Objective: to facilitate external trade and payment and promote
orderly development and maintenance of foreign exchange market in
India.
4. Issuer of currency
● Issues, exchanges and destroys currency notes as well as puts into
circulation coins minted by Government of India.
● Objective: to give the public adequate quantity of supplies of currency
notes and coins and in good quality.
5. Developmental role

Performs a wide range of promotional functions to support national

objectives.

6. Regulator and Supervisor of Payment and Settlement Systems

● Introduces and upgrades safe and efficient modes of payment systems
in the country to meet the requirements of the public at large.
● Objective: maintain public confidence in payment and settlement
system
7. Related functions
● Banker to the Government: performs merchant banking function for
the central and the state governments; also acts as their banker.
● Banker to banks: maintains banking accounts of all scheduled banks.

Monetary Functions of RBI

● Issuer of Bank Notes: The Reserve Bank of India has the monopoly of
issuing currency notes except for 1 Rupee note and coins.
○ The 1 Rupee note and the coins of all denominations are minted and
issue by the Government of India, not the RBI. But, they are circulated
by the RBI.
○ The RBI issues currency notes under a system called Minimum Reserve
System.
○ (The Reserve Bank of India is required to retain investments of at least 200 crore
rupees at all times under this arrangement. The first 115 crore rupees should be in
the form of gold or gold bullion, and the remaining 85 crore rupees should have been
in the form of foreign currencies.)
● Banker to the Government: The RBI acts as a banking agent and financial
advisor to the Central as well as the State Governments. In this capacity, the
RBI:
○ Manages Government accounts and treasuries.
○ Keeps deposits of the Government.
○ Lends to the Governments without any interest for the short term
 ○ Buys and sells Government Securities (G-Secs) on the Government’s
behalf.
○ Gives monetary and financial advice to the Governments.
● Bankers’ Bank: The RBI is the banker of all Scheduled commercial banks
(SCBs). In this capacity, it performs the following functions:
○ Keeps the reserves of banks in the form of Cash Reserve Ratio (CRR)
with itself.
○ Provides financial assistance to banks against mortgaged securities
○ Rediscounts Bills of Exchange.
● Lender of Last Resort: It also acts as a lender of last resort for the
Scheduled Commercial Banks (SCBs). Usually, banks and other financial
institutions borrow and lend among themselves to meet their financial needs.
But, in times of crisis, the SCBs approach the RBI to get financial assistance.
● Custodian and Manager of Foreign Exchange Reserves: In order to
stabilize the external value of Indian currency, the RBI maintains the
reserves of foreign currencies to stabilize the exchange rate.
○ This function of the RBI also helps promote international trade.
● Controller of Credit or Money Supply: It uses its monetary policy tools to
control the volume of money supply according to the economic situation of
the nation.
○ This helps in controlling inflation and deflation and hence stabilizing
the general price level in the economy.

General Functions of RBI

● Regulator of the Banks: The RBI Act of 1934 and the Banking Regulation Act
of 1949 entrust the RBI with the powers to regulate the banks in the country.
In this capacity, the RBI performs functions such as:
○ Licensing banks,
○ Prescribing minimum requirements of paid-up capital and reserves,
etc.
● Promotional Functions: The RBI works towards the promotion of the Indian
Financial System through functions such as
○ Enabling expansion of the Commercial Banks in terms of their
branches in the country or aboard,
○ Promoting baking habits of people,
○ Promoting financial inclusion,
○ Consumer education and protection,
 ○ Promoting Digital India initiatives in financial sector, etc.

Currency notes printing and coins minting in India

Currency notes are printed in 4 presses in India - Nasik (Maharashtra), Dewas (MP),
Mysore (Karnataka), Salboni (West Bengal)

Branch Owned By

Nasik (Maharashtra) Govt of India

Dewas (MP) Govt of India

Mysore (Karnataka) RBI (through Bharatiya Reserve Bank

Note Mudran Ltd.)

Salboni (West Bengal) RBI (through Bharatiya Reserve Bank

Note Mudran Ltd.)
Coins are minted in 4 locations - Mumbai, Hyderabad, Kolkata and Noida all 4 are
owned by the government of India.

As per the Indian Coinage Act of 1906, Coins can be issued up to the denomination
of ₹1000.

As per the RBI Act of 1934, Currency Notes can be issued up to the denomination
of ₹10,000.
Board of Financial Supervision (BFS)

The Board was constituted in November 1994 as a committee of the Central Board
of Directors of the Reserve Bank of India.

Primary objective of BFS is to undertake consolidated supervision of the financial

sector comprising commercial banks, financial institutions and non-banking finance
companies.

Constitution - RBI Governor - Chairman, 1 deputy governor (usually Deputy

Governor in charge of banking regulation and supervision) as vice chairman and 4
directors from central board as members for 2 years.

Board usually meets once in a month