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Unit 2: Reserve Bank of India

Preamble Notes

The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as:
“...To regulate the issue of Bank Notes and 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.”

Central Board

A central board of directors governs the Reserve Bank’s affairs. The Government of India, in
keeping with the Reserve Bank of India Act, appoints this board. The members of the board are:

1. Appointed/nominated for a period of four years
2. Constitution:
(i) Official Directors
(a) Full-time: Governor and not more than four Deputy Governors

(ii) Non-Official Directors
(a) Nominated by Government: Ten Directors from various fields and one
government official

(b) Others: Four Directors – one each from four local boards.

Did u know? The Reserve Bank of India was established on April 1, 1935 in accordance with
the provisions of the Reserve Bank of India Act, 1934.

General Superintendence

General superintendence and direction of the Bank’s affairs through:
Local Boards

1. One each for the four regions of the country in Mumbai, Calcutta, Chennai and New Delhi.
2. Membership: Consist of five members each, appointed by the Central Government for a
term of four years.

3. Functions: To advise the Central Board on local matters and to represent territorial and
economic interests of local co-operative and indigenous banks to perform such other
functions as delegated by Central Board from time to time.

!
Caution A central bank, reserve bank, or monetary authority, is an entity responsible for
the monetary policy of its country.

Financial Supervision - Board for Financial Supervision (BFS)

The Reserve Bank of India performs financial supervision under the guidance of the Board for
Financial Supervision (BFS). The Board was constituted in November 1994 as a committee of the
Central Board of Directors of the Reserve Bank of India.

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