IPCI Info

RBI the apex banking institution

RBI the apex banking institution, the Reserve Bank of India (RBI) has a basic function “…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.” The RBI, which commenced operations on April 1, 1935, is at the centre of India’s financial system. Hence it is called the Central Bank. It has a fundamental commitment to maintaining the nation’s monetary and financial stability. It started as a private share-holders’ bank – but was nationalized in 1949, under the Reserve Bank (Transfer of Public Ownership) Act, 1948.
RBI is banker to the Central Government, State Governments and Banks. Key functions of RBI Include:
• Monetary policy
• Supervision of Banking companies, Non-banking Finance companies and Financial Sector, Primary Dealers and Credit Information Bureaus
• Regulation of money market, government securities market, foreign exchange market and derivatives linked to these markets.
• Management of foreign currency reserves of the country and its current and capital account.
• Issue and management of currency
• Oversight of payment and settlement systems
• Development of banking sector
• Research and statistics.
While RBI performs these functions, the actual banking needs of individuals, companies and other establishments are met by banking institutions (called commercial banks) and non banking
finance companies that are regulated by RBI.
RBI exercises its supervisory powers over banks under the Banking Companies Act, 1949, which later became Banking Regulation Act, 1949.

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