Reserve Bank of India was founded on 1st April 1935
in accordance with the Reserve Bank of India Act 1934,
to respond to economic troubles after the First World War.
The central office of the R.B.I.was initially established in Calcutta
but was permanently moved to Mumbai in 1937.
Nationalization of R.B.I.took place in 1949 and from
January 1st, 1949 R.B.I. started working as Government
owned bank.R.B.I.controls the monetary and other
banking policies of the Indian Government. R.B.I.plays
an important role in the development strategy of the
Government of India.Sir Osborne Smith was the first
Governor of R.B.I. while C.D.Deshmukh was the first
Indian R.B.I.Governor.Head quarter of R.B.I. is at Mumbai.
It has 27 departments. These departments frame policies
in their respective work areas. They are headed by Senior
Officers in the rank of chief General Manager.
R.B. I. has 4 zonal offices at Chennai, Delhi, Kolkata and
Functions of RB1.-1.Maintaining a uniform rate of interest throughout the country.
2.R.B.I.has the sole rights of minting the money and
R.B.I.Governor signs the currency notes apart from
one rupee note.The one rupee note is issued by Ministry
of Finance and it bears the signature of finance secretary.
3.R.B.I.works as a custodian of country’s foreign currency reserve.
4.It manages the supply of money in the Indian economy.
R.B.I.provides financial assistance to commercial banks
and State Co-Operative Banks through re -discounting
of bills of exchange.
5.Central clearance and Accounts settlement.
6.Controller of Credit.
7.Custodian of cash reserves of commercial banks.
Commercial banks pay taxes on their net profit as per
Company’s Act.However R.B.I. is not liable for payment
of any income or wealth tax on its income. After meeting
its expenditures and other obligations it transfers about
99.99% of income to Government of India.
Reserve money is currency in circulation plus deposits
of commercial banks with R.B.I.
Repo rate is the rate at which R.B.I. lends money to
commercial banks in the event of any shortfall of funds.