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Manpreet Kaur, Lovely Professional University Unit 4: Reserve Bank of India

Unit 4: Reserve Bank of India Notes

CONTENTS
Objectives
Introduction

4.1 Role of Reserve Bank of India
4.2 Functions of Reserve Bank of India
4.3 Summary

4.4 Keywords
4.5 Self Assessment
4.6 Review Questions
4.7 Further Readings

Objectives

After studying this unit, you will be able to:

Discuss the role of Reserve Bank of India
Explain the functions of Reserve Bank of India

Introduction

The central bank of India is called the Reserve Bank of India (RBI). It was established on April 1,
1935 in accordance with the provisions of the Reserve Bank of India Act, 1934 with a view to
organize the financial frame work and facilitate fiscal stability in India.

The Central Office of the Reserve Bank was initially established in Calcutta but was permanently
moved to Mumbai in 1937. Though originally privately owned, since nationalisation in 1949,
the Reserve Bank is fully owned by the Government of India and acts the central regulatory
authority with regard to the functioning of the various commercial bank and the other financial
institutions in India. It regulates the issue of Bank Notes and keeps the reserves with a view to
securing monetary stability in India. It also operates the currency and credit system of the
country to its advantage.
4.1 Role of Reserve Bank of India

The Preamble prescribes the objective of the Reserve Bank of India in the following lines:
"…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."
Thus RBI plays the most important role in:
1. Securing monetary stability in India and
2. Operate the currency and credit system of the country.

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