History,Objectives,Governors and roles and functions of RBI

Today we learn about roles and functions of RBI as well as history and objectives of RBI. The origin of The Reserve Bank of India in 1935 was the culmination of a long series of efforts.

Roles and functions of RBI

 There are various roles and functions of RBI. Reserve Bank of India performs all the roles and functions of a central bank of India. It's roles and functions can be divided into three part first traditional function, second promotional and development function and third other functions.

1.Traditional function:-

The RBI performs the following traditional functions.

Issue of currency

The RBI act as the currency authority. As such, it has the Monopoly of issuing currency of all denomination except one rupee notes and coins and small coins which are issued by the Ministry of Finance of the Government of India.

Banker of government

The RBI act as banker to the Central Government and state governments. It maintains and operates the cash balances of the central and state governments in the current account deposit on which it pays no interest. It acts as the Agent of the central and state government in their dealings with the International Monetary Fund, the World bank, International Financial Corporation, IDA , Exim Bank and other Financial Institutions.

Control of credit

The RBI controls the money supply and credit to ensure price stability and meet the varying economic conditions of the country.

Training facilities 

The RBI has set up a number of training colleges and Center provide training to the Banking Personnel at different level like bankers Training College, Reserve Bank Staff College, College of Agriculture banking, zonal training centers etc.

Collection and publication of data and reports

The RBI has a division of reports reviews and publications under its department of economic analysis and policy which collects data on economic matters such as money, credit finance, agriculture and industry production, balance of payment, and published them in various publications.

2.Promotional and development functions:-

The RBI has been taken a direct and active role,firstly, in creating or helping to create the machinery needed for financing development activities all over the country and secondly, ensuring that the finance available flows in socially desired directions.

Agricultural Finance

The RBI has been expanding advice and financial assistance to the Co-operative credit Institutions for the development of agriculture and allied ruler activities.

Industrial finance 

The RBI set up industrial credit department in 1957 to advise and help the bank in providing financial assistant to industries and in setting up Financial Institutions like state Financial Institutions, IFCI, IDBI, ICICI etc.

Export credit

The RBI provides concessional credit, refinance facilities and guarantee to commercial banks for exporters. It has also set up the Export- Import Bank of India to finance export trade.

Development and Regulation of Banking system

The RBI has played an important role in the development and promotion of banking in the country.It has spread banking to the remotest corners of India through its Lead Bank scheme, SAA, and Regional Rural Banks.

3.Other functions

Reserve Bank of India also perform the following banking functions.

(1) It issues demand drafts made payable at its own officers or agencies and Markers, issues and circulates bank post-bills.

(2) It can borrow money from a Sid dual bank in India or from Central Bank in other countries.

(3) It purchase and sales gold and Bullion.

Objectives of RBI

The broad objectives of The Reserve Bank of India by the RBI act 1934 are as under:-

Full employment:-

RBI always tries to make full employment in this country but we know that there cannot be full employment in any country but if employment rate is between 90% - 95% then it can be considered as a full employment of the country.

Price stability:-

This is also the main object of the RBI. RBI always control the quantity of money and also the value of money in the Indian economy. RBI controls the rate of inflation and deflation in the country.

Growth and development:-

RBI plays very important role in the growth and development of the India.  The growth and development are measured by the GDP,national income, per capita income and living standard.

Balance of payment:-

RBI always try to make equal import and export but mostly They do import more than the export.

History of RBI

The earliest effort to set up a central bank dates back to January 1773 when Warren Hastings, the governor of Bengal, recommended the establishment of a "General Bank in Bengal and Bihar".

The next attempt was made in 1807-08 when Robert Richards, a member of the Bombay government submitted scheme for a "General bank". But the Governor- General was not impressed. The name of John Maynard Keynes also figures in the events leading to the  establishment of the reserve Bank of India.

The first major step was taken in 1921 when the three Presidency banks were amalgamated to form the Imperial Bank of India.  It was primarily commercial bank but it also performed certain Central banking functions, such as acting as banker of the Government and to some extent as bankers bank.But the regulation of note issue and management of foreign exchange were the direct responsibility of the central government

The Reserve Bank of India was constituted in accordance with the provisions of the act containing 58 sections and was inaugurated on 1 April 1935.

The Reserve Bank of India was constituted as a share holders bank with a fully paid up capital of Rs. 5 crores divided into shares of Rs. 100 each. Of these 5 lake shares, 2200 shares was subscribed by the directors of the bank and the remaining by private share holders.

In view of the need for close integration between the bank's policies and those of the government, the question of state ownership of the bank was raised from time to time. But it was only after independence that the decision of nationalize of the bank was taken. In terms of the Reserve Bank act 1948, its entire paid up capital was transferred to the Center Government on 1 January 1949 when it become a state owned Institution.

RBI governor list of India

       Name       -   Term start
1 Osborne Smith - 1 April 1935

2 James Braid Taylor -1 July 1937

3 C. D. Deshmukh  -  11 August 1943

4 Benegal Rama Rau  - 14 January 1957

5 K. G. Ambegaonkar -14 January 1957

6 H. V. R. Iyengar -1 March 1957

7 P. C. Bhattacharya  -1 March 1962

8 Lakshmi Kant Jha   -1 July 1967

9 B. N. Adarkar -4 May 1970

10 Sarukkai Jagannathan  -16 June 1970

11 N. C. Sen Gupta - 19 May 1975

12 K. R. Puri - 20 August 1975

13 M. Narasimham - 3 May 1977

14 I. G. Patel - 1 December 1977

15 Manmohan Singh-  16 September 1982

16 Amitav Ghosh -15 January 1985

17 R. N. Malhotra-  4 February 1985

18 S. Venkitaramanan- 22 December 1990

19 C. Rangarajan - 22 December 1992

20 Bimal Jalan-    22 November 1997

21 Y. Venugopal Reddy - 6 September 2003

22 D. Subbarao-  5 September 2008

23 Raghuram Rajan - 4 September 2013

24 Urjit Patel-  4 September 2016

25 Shaktikanta Das-   12 December 2018