RBI Functions
Banking · RBI के कार्य
📋Quick Overview
The Reserve Bank of India (RBI) is India's central bank, established on 1 April 1935 under the RBI Act, 1934, based on the recommendation of the Hilton Young Commission (1926). It was originally privately owned and was nationalized on 1 January 1949. Its headquarters are in Mumbai. The RBI manages monetary policy, issues currency notes (coins are issued by the Government of India), acts as banker to the government and banks, regulates the banking system, manages foreign exchange, and performs developmental roles.
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RBI Act 1934 | Established: 1 April 1935 | Nationalized: 1 January 1949 | HQ: Mumbai | Section 22: Note issue monopoly | ₹1 note is issued by Ministry of Finance (not RBI)
📖7 Main Functions of RBI
| Function | Description | Key Detail |
|---|---|---|
| 1. Monetary Authority | Formulates & implements monetary policy | Controls inflation, manages money supply via repo rate, CRR, SLR |
| 2. Issuer of Currency | Sole authority to issue bank notes | Section 22 of RBI Act. Coins issued by Govt of India. ₹1 note by Finance Ministry |
| 3. Banker to Government | Manages govt accounts, receipts, payments | Acts as banker to both Central & State govts |
| 4. Banker's Bank | Lender of last resort for commercial banks | Maintains CRR deposits, provides emergency funds |
| 5. Regulator of Banking | Supervises & regulates all banks | Issues banking license, sets norms, conducts inspections |
| 6. Forex Management | Manages foreign exchange reserves | Under FEMA (1999). Maintains exchange rate stability |
| 7. Developmental Role | Promotes banking habits, financial inclusion | Sets up institutions like NABARD, NHB, DICGC |
📖Important RBI Governors
| Governor | Tenure | Significance |
|---|---|---|
| Sir Osborne Smith | 1935–1937 | First Governor of RBI |
| Sir James Taylor | 1937–1943 | Second Governor |
| C.D. Deshmukh | 1943–1949 | First Indian Governor |
| Manmohan Singh | 1982–1985 | Later became PM of India |
| Bimal Jalan | 1997–2003 | Asian financial crisis management |
| Raghuram Rajan | 2013–2016 | Inflation targeting framework |
| Urjit Patel | 2016–2018 | Demonetization period |
| Shaktikanta Das | 2018–2024 | COVID-19 crisis management |
| Sanjay Malhotra | 2024–present | Current Governor (26th) |
📝Important Sections of RBI Act 1934
- •Section 22: RBI has the sole right to issue bank notes in India
- •Section 24: Maximum denomination of notes (₹10,000)
- •Section 26: Legal tender character of notes
- •Section 42: CRR — every bank must maintain cash reserves with RBI
- •Section 45: RBI can issue directions to banks (regulatory power)
- •RBI notes carry the signature of the RBI Governor (except ₹1 note — Finance Secretary)