The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934
. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India.
- Formulates, implements and monitors the monetary policy.
- Objective: maintaining price stability while keeping in mind the objective of growth.
- Regulator and supervisor of the financial system:
- Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
- Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.
- Manager of Foreign Exchange:
- Manages the Foreign Exchange Management Act, 1999.
- Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
- Issues and exchanges or destroys currency and coins not fit for circulation.
- Objective: to give the public an adequate quantity of supplies of currency notes and coins and in good quality.
- Performs a wide range of promotional functions to support national objectives.
- Regulator and Supervisor of Payment and Settlement Systems:
- Introduces and upgrades safe and efficient modes of payment systems in the country to meet the requirements of the public at large.
- Objective: maintain public confidence in payment and settlement system
- Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker.
- Banker to banks: maintains banking accounts of all scheduled banks.