History & Genesis of RBI
Prior to establishment of RBI, the functions of a central bank were virtually being done by the Imperial Bank of India . RBI started its operations from April 1, 1935. It was established via the RBI act 1934, so it is also known as a statutory body. Similarly, SBI is also a statutory body deriving its legality from SBI Act 1935.
RBI did not start as a Government owned bank but as a privately held bank without major government ownership. It started with a Share Capital of Rs. 5 Crore, divided into shares of Rs. 100 each fully paid up. In the beginning, this entire capital was owned by private shareholders. Out of this Rs. 5 Crore, the amount of Rs. 4,97,8000 was subscribed by the private shareholders while Rs. 2,20,000 was subscribed by central government.
After independence, the government passed Reserve Bank (Transfer to Public Ownership) Act, 1948 and took over RBI from private shareholders after paying appropriate compensation. Thus, nationalization of RBI took place in 1949 and from January 1, 1949, RBI started working as a government owned bank.
Hilton Young Commission
Hilton-Young Commission was the Royal Commission on Indian Currency and Finance set up by British Government of India in 1920s. In 1926, this commission had recommended to the government to create a central bank in the country. On the basis of mainly this commission, the RBI act was passed.
Original headquarters of RBI
Original headquarters of RBI were in Kolkata, but in 1937, it was shifted to Shahid Bhagat Singh Marg, Mumbai.
Structure & Functions of RBI
The core structure of RBI includes one Central Board of Directors, two Assistive bodies (BFS and BPSS), four local boards, 33 departments, 19 regional offices and 9 sub-offices.
Main functions of RBI
- To work as monetary authority and implement its Monetary Policy
- To serve as issuer of bank notes
- Serve as banker to central and state governments
- Serve as debt manager to central and state governments
- Provide ways and means advances to the state governments
- Serve as banker to the banks and lender of last resort (LORL) for them
- Work as supervisor and regulator of the banking & financial system
- Management of Foreign Exchange Reserves of the country
- Support the government in development of the country
Structure and functions of Central Board of Directors in RBI
Central Board of Directors is the top decision making body in the RBI. It is made of official directors and Non-official directors.