Establishment

The Reserve Bank of India is the central bank of India, was

established on April 1, 1935 during the British Raj in accordance
with the provisions of the Reserve Bank of India Act, 1934. The
central office of the Reserve Bank was initially established in
Kolkata, Bengal, but was permanently moved to Mumbai in 1937.
Though originally privately owned, the RBI has been fully owned
by the Government of India since nationalization in 1949.

Dr. Duvvuri Subbarao who succeeded Yaga Venugopal Reddy

on September 2, 2008 is the current governor of RBI.

The Reserve Bank of India was set up on the recommendations

of The Hilton Young Commission. The omission submitted its
report in the year 1926, though the bank was not set up for nine
years.

The Preamble of the Reserve Bank of India describes the

various functions of the Reserve Bank as to regulate the issue of
Bank Notes and to 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.

It has 22 regional offices, most of them in state capitals.

 Main functions
Monetary Authority:

Formulates, implements and monitors the monetary policy.

Objective: maintaining price stability and ensuring adequate

flow of credit to productive sectors.

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.

Manager of Foreign Exchange:

Manages the Foreign Exchange Management Act, 1999.

Objective: to facilitate external trade and payment and

promote orderly development and maintenance of foreign
exchange market in India.

Issuer of currency:

Issues and exchanges or destroys currency and coins not fit

for circulation.

Objective: to give the public adequate quantity of supplies of

currency notes and coins and in good quality.

Developmental role:

Performs a wide range of promotional functions to support

national objectives.
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.
 Legal
framework
Umbrella Acts:

Reserve Bank of India Act, 1934: governs the Reserve Bank

functions

Banking Regulation Act, 1949: governs the financial sector

Acts governing specific functions:

Public Debt Act, 1944/Government Securities Act (Proposed):

Governs government debt market

Securities Contract (Regulation) Act, 1956: Regulates

government securities market

Indian Coinage Act, 1906:Governs currency and coins

Foreign Exchange Regulation Act, 1973/Foreign Exchange

Management Act, 1999: Governs trade and foreign
exchange market

Acts governing Banking Operations:

Companies Act, 1956:Governs banks as companies

Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970/1980: Relates to nationalization of
banks

Bankers' Books Evidence Act

Banking Secrecy Act

 Negotiable Instruments Act, 1881

Acts governing Individual Institutions:

State Bank of India Act, 1954

The Industrial Development Bank (Transfer of Undertaking

and Repeal) Act, 2003

The Industrial Finance Corporation (Transfer of Undertaking

and Repeal) Act, 1993

National Bank for Agriculture and Rural Development Act

National Housing Bank Act

Deposit Insurance and Credit Guarantee Corporation Act

 General
Information
Headquarters: Mumbai, Maharashtra, India

Coordinates: 18°55′58″N 72°50′13″E / 18.93278°N 72.83694°E /

18.93278; 72.83694Coordinates: 18°55′58″N 72°50′13″E / 18.93278°N

72.83694°E / 18.93278; 72.83694

Established: April 1, 1935

Governor: Dr. D Subbarao

Central bank of: India

Currency: Indian Rupee

ISO 4217 code: INR

Base borrowing rate: 5.2

Base deposit rate: 9.5

Website: www.rbi.org.in
 OBJECTIVES
Monetary authority:

Formulates, implements and monitors the monetary policy.

Objective: maintaining price stability and ensuring adequate

flow of credit to productive sectors.

Regulator and supervisor of the financial system:

Prescribes board parameters of banking 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. The Banking Ombudsman Scheme has
been formulated by the Reserve Bank of India(RBI) for
effective redressal of complaints by bank customers.

Manager of exchange control:

Manages the Foreign Exchange Management Act, 1999.

Objective: to facilitate external trade and payment and

promote orderly development and maintenance of foreign
exchange market in India.

Issuer of currency:

Issues and exchanges or destroys currencies and coins not

fit for circulation.
 Objective: the main objective is to give the public adequate
supply of currency of good quality and to provide loans to
commercial banks to maintain or improve the GDP(gross
domestic product).

The basic objective of RBI is to issue bank notes, to maintain

the currency and credit system of the country to utilize it in its
best advantage, and to maintain the reserves. RBI maintains the
economic structures of the country so that it can achieve the
objective of price stability as well as economic development,
because both objectives are diverse in themselves.

Developmental role:

Performs a wide range of promotional functions to support

national objectives.

Related functions:

Banker to the government: performs merchant banking

function for the central and the state government; also acts
as their banker.

Bank to banks: maintains banking accounts of all scheduled

banks.

There is now an international consensus about the need to

focus the tasks of a central bank upon central banking. RBI is far
out of touch with such a principle, owing to the sprawling
mandate described above. The recent financial turmoil worldover,
has however, vindicated the Reserve Bank’s role in maintaining
financial stability in India.
 Year Deposits and other
Bills Payable
Accounts

1950 19,983 173

1955 11,592 262

1960 20,218 317

1965 32,897 446

1970 64,793 923

1975 156,665 2,254

1980 439,869 10,995

1985 1,032,134 24,556

1990 1,820,468 38,656

1995 3,984,352 116,622

Major liability of comm. banks

Major assets of
Comm. Banks
 Year Investments[3] Advances[4]

1950 4,330 5,353

1955 4,600 7,037

1960 7,241 12,458

1965 9,884 21,954

1970 18,148 46,850

1975 45,999 106,167

1980 126,642 272,000

1985 303,378 623,553

1990 687,151 1,095,412

1995 1,750,206 2,243,308

Bibliography
Internet sources:

www.rbi.org.in
 www.deamon.com

www.scour.com

www.yahoo.com

www.wikipedia.com

acknowledgement
In preparation of this project by me, I feel great pleasure
because it gives me extensive practical knowledge in my career. I
got knowledge of expansionary and contractionary policies by this
project.
 I express our deep sense of gratitude to MS. NIDHI for her
valuable guidance during my project work.

I would also like to thank all our professors and the non-
teaching staff who have helped me for every little requirement
that I had. It is due to the collective efforts and valuable
recommendations of all the above mentioned people that this
project has been successfully completed.
 Project RESERVE BANK OF INDIA

By JAIN JITIKA

Class F.Y.B.B.I Roll no. 15

Professor MS NIDHI

Subject ECONOMICS 2

College KISHANCHAND CHELLARAM COLLEGE