The Reserve Bank of India (RBI) is the central banking institution of our country that regulates the monetary policy of India. The central bank is primarily responsible for governing money supply, controlling interest rates and managing currency of the country apart from many other financial and regulatory activities. The RBI is also responsible for regulating the commercial banking system of India.
Establishment and Evolution of RBI
In accordance with the Reserve Bank of India Act, 1934, RBI was established on 1st April, 1935. The central bank was initially headquartered at Kolkata but the central office was moved permanently to Mumbai in 1937. Initially it was owned privately by shareholders but after independence it was taken up by the Government of India. Since January 1, 1949, RBI has been a nationalized entity and its basic functions were described in its preamble as: “…to 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.”