Reserve Bank of India (RBI) : Structure, Methods Resorted, Functions|Commerce YouTube Lecture Handouts Part 1

Get unlimited access to the best preparation resource for Bank-PO : get questions, notes, tests, video lectures and more- for all subjects of Bank-PO.

Date of Establishment – 1st April, 1935

ACT – Reserve Bank of India Act, 1934

Committee Recommendation – Hilton Young Commission

Initial Capital – ₹ 5 CR.

Headquarter – Calcutta (earlier) , Mumbai (now)

Nationalization – 1st January, 1949

Reserve Bank of India (RBI): Structure, Methods Resorted, Functions | Commerce

Structure of RBI

  • The organizational structure of RBI - the Central Board of Directors (CBD) and Local Board constituted by The Transfer of Public Ownership Act and Central Govt. respectively.
  • CBD conducts 1 meeting every quarter and at least 6 meetings every year,
    • Members of CBD = 21
    • Non-official Directors-
    • 10 Directors are nominated by GOI from various fields + 2 Govt. officials.
    • 1 Director each from Local Boards is nominated to the CBD by the Central Govt.
    • Tenure = 4 years
    • Local Boards = 5 members each who represent regional interests and the interests of co-operative and indigenous banks.

Additionally,

  • Executive Directors = 03
  • Local Boards office Centres = Mumbai, Kolkata, Chennai and New Delhi
  • offices = 27 Regional offices
  • 04 Sub-offices.
  • official Directors-
  • No. of Deputy Governors = 04
  • Tenure = 5 years
  • Governor = Shaktikanta Das
  • Tenure = 5 years
  • 1st Governor appointed was Sir Osborne Smith.
CBD Members

Fully Owned Subsidiaries

Deposit Insurance and Credit Guarantee Corporation of India (DICGC) , Bhartiya Reserve Bank Note Mudra Private Limited (BRBNMPL) , Reserve Bank Information Technology Private Limited (ReBIT) , Indian Financial Technology and Allied Services (IFTAS) .

Training Establishments

Has six training establishments

  • Three, namely, RBI Academy, College of Agricultural Banking and Reserve Bank of India Staff College are part of the Reserve Bank.
  • Others are autonomous, such as, National Institute for Bank Management, Indira Gandhi Institute for Development Research (IGIDR) , Institute for Development and Research in Banking Technology (IDRBT)
  • The RBI also acted as Burma՚s (now Myanmar) central bank until April 1947 except during the years of Japanese occupation (1942 – 45) . After the Partition of India in August 1947, the bank served as the central bank for Pakistan until June 1948 when the State Bank of Pakistan commenced operations.
  • Started as private bank with private shareholding as was in vogue in most foreign central banks of the world operating at that point of time. Though set up as a shareholders՚ bank, a private bank, the RBI has been fully owned by the Government of India since its nationalization in 1949.
  • Nationalized by the Government through an Act called Transfer of Public Ownership Act, 1948.
  • RBI has a monopoly of note issue except one-rupee notes which are issued by the Ministry of Finance. The RBI is permitted to print currency up to 10,000-rupee notes.
  • The Government of India has the sole right to mint coins.
  • The responsibility for coinage vests with the Government of India in terms of the Coinage Act, 1906 as amended from time to time. The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the four India Government Mints at Mumbai, Alipore (Kolkata) , Saifabad (Hyderabad) , Cherlapally (Hyderabad) and NOIDA (UP) .
  • The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act.
  • Besides being named as ‘BANK,’ does not fall in the category of commercial banks as it does not do the business of banking as defined in the Banking Regulation Act, 1949 – accepting deposits and lend money.
  • RBI controls the changes in the stock of market, changes exert a powerful influence on prices, greatly influence output and distribution of income and wealth which affects employment, helps in balancing income and wealth distribution, ensures price stability, balanced credit expansion, long term investments in an economy.
  • It is a member bank of the Asian Clearing Union. Established at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) , the primary objective of ACU, at the time of its establishment, was to secure regional co-operation as regards the settlement of eligible monetary transactions among the members of the Union to provide a system for clearing payments among the member countries on a multilateral basis.
  • The bank is also active in promoting financial inclusion policy and is a leading member of the Alliance for Financial Inclusion (AFI) . The bank is often referred to by the name ‘Mint Street.’

Custodian to Foreign Exchange and Detection of Fake Currency

The Reserve Bank has custody of the country՚s reserves of international currency, and this enables the Reserve Bank to deal with crisis connected with adverse balance of payments position and checks the originality of the currency to avoid circulation of fake money in the market.

Developed by: