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.
privately owned, since nationalisation in 1949, the Reserve Bank is fully owned
by the Government of India.
Preamble of the Reserve Bank of India describes the basic functions of the Reserve
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 Reserve Bank's affairs are
governed by a central board of directors. The board is appointed by the Government
of India in keeping with the Reserve Bank of India Act.
: General superintendence and direction of the Bank's affairs
- One each for the four
regions of the country in Mumbai, Calcutta, Chennai and New Delhi
of five members each
- appointed by the Central Government
a term of four years
: To advise the Central Board on local matters and to represent territorial and
economic interests of local cooperative and indigenous banks; to perform such
other functions as delegated by Central Board from time to time.
The Reserve Bank of India
performs this function under the guidance of the Board for Financial Supervision
(BFS). The Board was constituted in November 1994 as a committee of the Central
Board of Directors of the Reserve Bank of India.
objective of BFS is to undertake consolidated supervision of the financial sector
comprising commercial banks, financial institutions and non-banking finance companies.
Board is constituted by co-opting four Directors from the Central Board as members
for a term of two years and is chaired by the Governor. The Deputy Governors of
the Reserve Bank are ex-officio members. One Deputy Governor, usually, the Deputy
Governor in charge of banking regulation and supervision, is nominated as the
Vice-Chairman of the Board.
Board is required to meet normally once every month. It considers inspection reports
and other supervisory issues placed before it by the supervisory departments.
through the Audit Sub-Committee also aims at upgrading the quality of the statutory
audit and internal audit functions in banks and financial institutions. The audit
sub-committee includes Deputy Governor as the chairman and two Directors of the
Central Board as members.
The BFS oversees
the functioning of Department of Banking Supervision (DBS), Department of Non-Banking
Supervision (DNBS) and Financial Institutions Division (FID) and gives directions
on the regulatory and supervisory issues.
of the initiatives taken by BFS include:
of the system of bank inspections
- introduction of off-site
- strengthening of the role of statutory auditors
- strengthening of the internal defences of supervised
The Audit Sub-committee
of BFS has reviewed the current system of concurrent audit, norms of empanelment
and appointment of statutory auditors, the quality and coverage of statutory audit
reports, and the important issue of greater transparency and disclosure in the
published accounts of supervised institutions.
- supervision of financial institutions
- legal issues in bank frauds
in assessments of non-performing assets and
rating model for banks.
governing specific functions
- Public Debt Act, 1944/Government Securities Act (Proposed):
Governs government debt market
- Securities Contract (Regulation)
Act, 1956: Regulates government securities market
Coinage Act, 1906:Governs currency and coins
Exchange Regulation Act, 1973/Foreign
Exchange Management Act, 1999: Governs trade and foreign
- "Payment and Settlement Systems Act, 2007: Provides for regulation and supervision of payment systems in India"
governing Banking Operations
Act, 1956:Governs banks as companies
- Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970/1980: Relates to nationalisation of banks
Books Evidence Act
- Banking Secrecy Act
Instruments Act, 1881
governing Individual Institutions
Bank of India Act, 1954
- The Industrial Development Bank
(Transfer of Undertaking and Repeal) Act, 2003
- The Industrial
Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993
Bank for Agriculture and Rural Development Act
Housing Bank Act
- Deposit Insurance and Credit Guarantee
- Formulates, implements and monitors the monetary policy.
- Objective: maintaining price stability and ensuring adequate
flow of credit to productive sectors.
and supervisor of the financial system:
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.
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.
to give the public adequate quantity of supplies of currency notes and coins and
in good quality.
- Performs a wide range of promotional functions
to support national objectives.
- 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.
Has five training establishments
- Two, namely, College of Agricultural
Banking and Reserve Bank of India Staff College are
part of the Reserve Bank
- Others are autonomous, such as,
National Institute for Bank Management, Indira Gandhi Institute for Development
Research (IGIDR), Institute for Development and Research in Banking Technology
For details on training
establishments, please check their websites links which are available in Other
owned: Deposit Insurance and Credit Guarantee Corporation
of India(DICGC), Bharatiya Reserve Bank Note Mudran Private Limited(BRBNMPL)