RESERVE BANK OF INDIA



Reserve Bank of India and its main functions


Reserve Bank of India (RBI) is the central bank of India. it is the operator of all the banks of India. The Reserve Bank regulates the economy of India. It was established on 1 April 1935 in accordance with the Reserve Bank of India Act 1934. The central office of the Reserve bank was initially established in Kolkata, which was permanently moved to Mumbai in 1937.
The British government established it, it was initially a private owned bank during the British governance but in independent India it was nationalized in January 1949. since then, it has full ownership of the government of India. 





Some main functions of the Reserve Bank of India

(i) Issue of bank notes :- The Reserve Bank of India has the sole authority to issue all types of notes. Notes from 2 rupees to 2000 rupees issued by the Reserve Bank of India. Only 1 rupee note and all types of coins are issued by the ministry of finance of the government of India.

(ii) Working as the government banker agent and consultant :- All government accounts are held by the Reserve Bank of India and when need arises, Reserve Bank gives financial advice to the government. If required, the commercial bank also takes loan from the Reserve Bank. It represents the government of India as the member of the IMF and the World bank.

(iii) Bank of bank’s :- All banks have account with the Reserve Bank of India. A commercial bank is concerned with its customers, the same relation is with the Reserve bank of India to commercial banks. If required, the commercial bank also takes loan from the Reserve Bank of India. Therefore it is called bank of bank’s.

(iv) Credit control :- The Reserve Bank does the work of credit control. The work of credit control in the present time is an important function of the Reserve Bank of India.

(v) Lender of the last resort :-The Reserve Bank also acts as the last lender to scheduled commercial banks in the country. When a commercial bank does not get loan from anywhere during the financial crisis, then it can demand a loan from the Reserve Bank as a last resort.

(vi) Custodian of foreign exchange reserves :- The Reserve Bank also acts as the guardian of foreign exchange funds.


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