<\/span><\/h2>\nThe strategies formulated by Dr. BR Ambedkar in his book named \u201cThe Problem of The Rupee it\u2019s Origin and Solution\u201d served as a base for the concept of The Reserve Bank of India. This central banking institution was established based on the suggestions of the Royal Commission on Indian currency and finance in 1926. This Commission was also known as the Hilton Young Commission. The Reserve Bank of India became a member Bank of the Asian clearing union after it was nationalized in 1949. RBI regulates the credit and currency system in India. Maintaining the confidence of the public in the system, protecting the interest of the depositors, and offering cost-effective banking services like cooperative banking and commercial banking to the people are the chief objectives of the Reserve Bank of India.<\/span><\/p>\n<\/span>The Timeline of RBI<\/span><\/h2>\n\n- 1934- The British enacted the Reserve Bank of India Act.<\/span><\/li>\n
- 1935- The Reserve Bank of India was established on April 1st in Calcutta.<\/span><\/li>\n
- 1937- The Reserve Bank of India was permanently moved to Mumbai.<\/span><\/li>\n
- 1949- After being held by stakeholders, the bank got nationalized after independence.\u00a0\u00a0<\/span><\/li>\n<\/ul>\n
<\/span>The Preamble of the RBI<\/span><\/h2>\nThe preamble of RBI explains its primary functions:<\/span><\/p>\n“To regulate the issue of Bank notes and keeping of reserves to secure monitor stability in India and generally to operate the currency and credit system of the country to its advantage.”<\/strong><\/p>\n<\/span>Functions of the Reserve Bank of India<\/span><\/h2>\nBeing a central bank, RBI serves a significant role in regulating the country’s financial transactions. Some of them are:<\/span><\/p>\n\n- The monetary authority<\/b><\/li>\n
- Implements monetary policies<\/span><\/li>\n
- Monitors the monetary policy<\/span><\/li>\n
- Ensuring price stability while considering the economic growth of the country<\/span><\/li>\n
- Regulator and administrator of the financial system<\/b><\/li>\n<\/ul>\n
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\n- The RBI determines the comprehensive parameters of banking operations.<\/span><\/li>\n
- Methods such as license issuing, liquidity of assets, Bank mergers, branch expansion, etc., are responsible for the functioning of the country’s banking and financial system.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ol>\n
\n- Managing foreign exchange<\/b><\/li>\n<\/ul>\n
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\n- Forex reserves of India a managed by the RBI.<\/span><\/li>\n
- It is responsible for maintaining the value of the Rupee outside the country.<\/span><\/li>\n
- It Aids foreign trade payments.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ol>\n
\n- Issuer of Currency<\/strong><\/li>\n<\/ul>\n
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\n- Providing the public with sufficient supplier currency notes and coins is the Reserve Bank of India\u2019s responsibility.<\/span><\/li>\n
- The RBI also takes care of the quality of currency notes and coins.<\/span><\/li>\n
- RBI is in charge of showing an exchange of currency and coins.<\/span><\/li>\n
- Destroying the currency and coins unsuitable for circulation is also RBI’s job.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ol>\n
<\/span>The Reserve Bank of India\u2019s development role<\/span><\/h2>\nIn a developing country like India, RBI has to perform various developmental functions in addition to routine operations. These functions are country-specific and change accordingly. Some of these functions are:<\/span><\/p>\n\n- RBI organizes promotional functions that support National objectives and encourage rural and agricultural economic development.<\/span><\/li>\n
- RBI will regularly issue directives to commercial banks to lend loans to small-scale industrial units.<\/span><\/li>\n<\/ul>\n