Reserve Bank of India RBI Functions, Organization, Governors

With economic growth assuming a new urgency since independence, the range of the Reserve Bank’s functions has steadily widened. The Bank now performs a variety of developmental and promotional functions, which, at one time, were regarded as outside the normal scope of central banking. In addition to its traditional central banking functions, the Reserve Bank has certain non-monetary functions of the nature of supervision of banks and promotion of sound banking in India. A significant object of the Reserve -Bank of India has also been to assist the planned process of development of the Indian economy. This newly constituted dept. will separate the activities of debt management and monetary operations in the future. This department will also perform the duties of developing and monitoring the instruments of the money market and also monitoring the government securities and foreign money markets.

X.37 The Department of Government and Bank Accounts (DGBA) manages the functions of the Reserve Bank as the banker to banks and banker to governments, besides maintaining internal accounts and formulating accounting policies of the Reserve Bank. X.4 During the year, the Reserve Bank’s communication strategy facilitated in instilling confidence among the public, investors and other stakeholders. When warranted, timely interventions in the supervisory and financial markets space through verbal communication were undertaken.

The rising frequency of geopolitical conflicts has highlighted the issue of weaponisation of reserves, with sanctions affecting the accessibility and usability of foreign assets. The rapid advancement of technology such as ongoing work by various central banks on digital currencies (CBDCs), cryptocurrency markets and AI is reshaping the global financial landscape and provides opportunities as well as challenges. The Reserve Bank of India (RBI) was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, of 1934. It serves as the monetary authority, regulator, and supervisor of the financial system, controlling monetary policy, managing foreign exchanges, and overseeing payment and settlement systems.

Reserve Bank of India (RBI), History, Function and Act

Under this system, deposits up to Rs.1.00 lakh with the bank branch are guaranteed for payment. Reserve Bank of India has dismissed worries about the “exposure” of Indian banks to the Gautam Adani-led conglomerate. The RBI provides financial and banking-related advice to the government as and when requested. It is responsible for deciding the direction of the monetary policies designed. Price stability, on the other hand, does not mean that there will be no alterations in the price of the things but it simply means that inflation should be controlled.

Financial stability assessment under FSAP is mandatory for 32 systemically important jurisdictions every five years and for another 15 jurisdictions every ten years. India was one of the first countries to volunteer for the FSAP assessment after the exercise began in 1999 and has been undergoing the FSAP since 2010. The majority of meetings under 2024 FSAP exercise for India started in December 2023 and concluded on October 4, 2024. The FSAP exercise has been completed with the release of the Financial System Stability Assessment (FSSA) by the IMF on February 28, 2025. The Financial Sector Assessment (FSA) report by the World Bank is also expected to be released in due course.

History  of Reserve Bank of India (RBI)

Fixed Deposits with other financial institutions like ICICI, IDBI, etc. and those with financial companies are not covered under the scheme. ICICI is since merged with ICICI Bank Ltd. and IDBI is getting converted into a bank. In India RBI acts as the clearing house for settlement of banking transactions.

• In other words, this facility is provided to meet temporary mismatches between revenue collections and revenue expenditures of governments.
• The RBI gives banks emergency loans and short-term credit for certain needs.
• The Reserve Bank has also the power to inspect the accounts of any commercial bank.
• The Reserve Bank of India, on the other hand, says that increasing the dividend payment to the government can prove to be inflationary as there will be more money in the market and may harm its major task of macroeconomic stability.
• However hereby RBI functions plays a role as lender (acting as the lender of the last resort for all banks when they are in financial crisis situation) that lends money to the primary banks of India on certain interests.
• The Department shared the Reserve Bank’s stance on various policy issues including IMF resource raising through its Bilateral Borrowing Arrangements (BBAs), with the Ministry of Finance (MoF), Government of India (GoI).

Patel maneuvered demonetization and its effects, and focused on bolstering the monetary policy framework that had been introduced during the tenure of his predecessor Raghuram Rajan. Shaktikanta Das, who had the second-longest term as an RBI governor, guided India through the economic challenges of the COVID-19 pandemic by introducing supportive monetary policies. After the Central Government of India and the Ministry of Finance, its Reserve Bank of India plays the most crucial role in driving the economy of Indian banking system.

• RBI provides this facility to protect the interest of depositors and to prevent the possible failure of the bank.
• Further, to meet the knowledge needs of regional media with respect to central banking policies, informal media interactions and workshops on important policy initiatives were held at Kolkata and Hyderabad during the year.
• The Reserve Bank of India acknowledges how important communication is in modern central banking.
• The Department focused on improving the scope and quality of statistics and information management by adopting latest technologies.

This board includes both official and non-official members, ensuring diverse expertise and representation from various sectors and regions across the country. RBI extends indirect financing to State Co-operative Banks thereby connects the co ­operative sector with the main banking system of the country. This way the financial needs of agricultural sector are taken care of by RBI. It, however, extends cheap indi ­rect financial assistance to the agricultural sector by providing large sums of money through General Line of Credit to NABARD.

Reserve Bank of India Timeline

After this act, the government of India entered into agreements with the Presidency Banks to work as authorized agents to promote circulations of the paper notes across length explain the function of rbi and breadth of British India. But since India is a vast country, redemption of these notes became a big issue. Consequently, some “Currency Circles” came up in various parts of country where the paper notes of Indian government were legal tenders. The design, form and material of bank note are approved by Central Government on the recommendations of Central Board of the RBI.

Controlling Credit Created By Banks

4 The Royal Institute of International Affairs, commonly known as Chatham House, is a British think-tank based in London, England. The Chatham House rule evolved to facilitate frank and candid discussions on any issue by speakers who may not have other appropriate forum to speak freely. X.83 A system using AI/ML has been developed to regularly track and analyse corporate sentiments from online and print media. The information collected through this system supplements the results of regular enterprise surveys. Reserve Bank of India (RBI) operates through a well-structured network of branches and offices across the country. At the top is the Central Office, located in Mumbai, which serves as the headquarters and houses the RBI Governor.

Governors

It was the first ever bank to establish an integrated system of ATM machines and received an ISO certification. As per Preamble to the Government Securities Act, 2006, it is an Act to consolidate and amend the law relating to Government securities and its management by the RBI and for matters connected therewith or incidental thereto. In the interest of public and at the request of the Central or State Government, the Central Board may permit the Governor or a Deputy Governor to undertake part-time honorary work, whether related to the purposes of the Act or not.

UPSC Coaching: PCM 2026

As per the GoI guidelines, the DBT payments under CSS need to be processed through National Payments Corporation of India’s (NPCI) Aadhaar Payment Bridge System (APBS). The APBS functionality has been developed to enable governments to make payments to beneficiaries based on Aadhaar numbers instead of bank account number and IFSC11. RBI surplus transfer may weaken the RBI’s financial buffer and independence, limiting its ability to manage financial crises. Additionally, improper utilisation of these funds could lead to inflation, further impacting economic stability and the central bank’s role in maintaining market confidence.

These coins are required to be circulated to public only through Reserve Bank un ­der Section 38 of the RBI Act. The RBI authorises individuals dealing in foreign currency to hold International Debit Cards (IDC) for transactions from a current account. Additionally, Indian residents who deal in foreign currency with an authorised dealer can hold International Credit Cards (ICC). The RBI strictly monitors the credit given by different banks to maintain an equilibrium between demand and supply.

Each scheduled bank must send a weekly return to the Reserve Bank showing in detail, its assets and liabilities. This power of the Reserve Bank to call for information is also intended to give it effective control of the credit system. The Reserve Bank has also the power to inspect the accounts of any commercial bank. The Reserve Bank of India is the controller of credit i.e. it has the power to influence the volume of credit created by banks in India.