Functions of Reserve Bank of India


Functions of Reserve Bank of India

Functions of Reserve Bank of India

Functions of Reserve Bank of India

Reserve Bank of India was established on April 1, 1935, with a capital of 5 crores. This capital of 5 crores was divided into 5 lakh equity shares and of Rs. 5 crores was divided into 5 lakh equity shares and of Rs.100 each and the ownership of almost all the share capital was with some non-government shareholders. It was nationalized on January 1, 1949, as the government acquired the private sharer holdings.  Its first Governor was Sir Smith (1935-37) and 1st Indian Governor was C.D. Deshmukh (1948-49) 

The Functions of  Reserve Bank of India are as follows: 

1. Note issuing authority: The Reserve Bank of India has the sole authority of issuing currency ( except one rupee note, which is issued by the Ministry of Finance). 

2. Banker to the government: It acts as a banker, agent, and financial adviser to the government of India. 

3. Banker’s bank: It performs the functions of a banker of all other banks in the country. 

4. Lender of the Last Resort:  If a commercial bank fails to get financial accommodation from anywhere else it can approach the central bank as its last resort. 

5. Custodian of Foreign Exchange Reserves: RBI also functions as the custodian of the nation’s foreign exchange reserves. These reserves are regulated to stabilize the exchange rate in the international money market and to promote exports. 

6. Clearing House Function: RBI as the central bank of India also performs the function of a clearing house. Every bank keeps cash reserves with the central bank.   

7. Controller of Money Supply and Credit: The central bank controls the supply of credit through its various instruments of quantitative and qualitative control. 

8. Collection of Statistics: RBI collects a variety of statistical information and publishes the same periodically. 

9. Other Functions: Some other functions performed by the Reserve Bank of India are:

(i) Agricultural credit: Reserve Bank in India provides credit facilities for the development of agriculture. 

(ii) International Monetary Conferences: RBI represents their countries in international monetary conferences like International Monetary Fund, World Bank and other conferences and seminars. 

(iii) Money and Bill Market: Central bank also organizes the money and bill market in the country. 

(iv) Return of Torn Notes: RBI gets back old and torn notes and issues new ones in their places. 0 0 0

Functions of Reserve Bank of India

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