Recommend by Hilton young commission. 20 Members (Directors), Governor & 4 Deputy Governor, one member recommended by Minister of Financial & 10 Directors recommend by Central Government & Four Directors recommend by Central Government at Four Headquarters at Kolkata, Delhi, and Mumbai & Chennai. Governor of Reserve Bank of India is Shaktikanta Das (2021)
Functions of the Reserve Bank of India
|Bank of Issue||Banker to government||Controller of Credit|
|Separate of issue department for print currency notes.|
Any coins, notes in any denomination it can print, sole authority.
₹4,669,426 crore (US$620 billion) (FY-2020 -2021)
According to Business Standard Report, 705.6 tonnes, as of June 30, 2021.
|Transact government business transactions, in behalf of government.|
Adviser, agent government banker.
It helps both governments C/ S.
Also help to commercial banks at the time of cries.
Last resort of the Government
|Every bank need to get license for every branch.|
RBI can called bank license at anytime.
Can interrogate commercial bank accounts.
Has the power to tell other banks to not give or lend money to particular group.
Agent & Adviser of Government
- Accept public debt behalf of government as an agent.
- Provide T-bills, securities.
- Act as financial advices in all financial matters.
Functions as national clearing house
- Twice a day, Cheques clearing in banks.
- Banks can settle their interbank claims.
- RBI can lend money to commercial banks à through genuine trade bills which are usually available at repo rate / MSF.
Custodian of foreign Reserves
- It acts as India’s reserve for international currencies.
- $286 b foresees reserves.
- It watches the movement of market though ensure order and these is no volatility.
- It takes up operation to stabilize the rate of Indian rupee in the market.
|Supervisory functions||Promotional functions|
|Granting license to banks.|
Inspect the accounts of commercial banks.
Implementation of insurance deposit scheme.
On site & off site verification.
Whole control of operation under bank regulating act 1949 & RBI act 1934.
Lender’s last resort.
Holds country’s gold & foreign exchange reserve
Used to manage both inflation & Deflation.
- Total volume of money circulating in the economy M0
- Narrow M1: à equals the sum of money with public and the demand deposits with the banks.
- Broad money or M3: Time deposits (fixed deposits) in the post office savings bank account deposits.
- M2 = M1 + Post office savings.
- M4 = M3 + National saving.