Reserve Bank of India

Banking awareness subject is in limelight because of the space it is acquiring in recent bank and other govt. sector exams. As a non-commerce student, you don't need to do PhD in this subject. But you must be aware of basic structure of bank system on which it is thriving. I will try my level best to post the relevant material as per the demand of the recent exams.

RESERVE BANK OF INDIA(RBI):
RBI is the apex institution of  country's monetary system and financial system.

History of RBI:
In British India, there was no regulation on banks. By early 1930 there were more than 1200 banks in India and all without any regulation. Problems start with Great American Depression(1929) when share market and companies of US and Europe collapse which lead to decline in raw material import. Merchants in India were not able to pay the loan amounts due to this situation.(Note: At that time only big merchants and raw material exporters were given loans by banks).
Indian banks started to collapse. Then, British India govt. sets up RBI to supervise these banks.

Existence of RBI:

• RBI came into existence on April 1, 1935 on the recommendation of Hilton Young(Royal) Commission as per RBI act, 1934.
• Initially, it was constituted as private shareholders' bank with a fully paid-up capital of Rs 5 crores. 
• It was nationalized on 1 January, 1949. (Note: Nationalization means takeover of privately owned corporations, industries, and resources by a government). 

MEMBERS OF RBI:
The general superintendence and direction of the RBI is entrusted with the 21-member-strong Central Board of Directors—the Governor, four Deputy Governors, two Finance Ministry representative, ten Government-nominated Directors to represent important elements from India's economy, and four Directors to represent Local Boards headquartered at Mumbai, Kolkata, Chennai and New Delhi.

PRESENT Governor of RBI: RAGHURAM RAJAN(2013 to date)
FIRST Governor of RBI: SIR OSBORNE SMITH(1935 to 1937)
FIRST INDIAN Governor of RBI: SIR C D DESHMUKH(1943 to 1949)

CENTRAL OFFICE OF RBI:
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.
It has 19 Regional Offices.

FUNCTIONS OF RBI:

• Currency Authority: RBI has monopoly of note issue. It issues currency under Minimum Reserve System 1957(Discussed later)

• Banker to the Government(Centre as well as State): It provides short term credit to government. The central government is empowered to borrow any money it likes from the RBI. Thus the Central Government is the ultimate monetary authority of the country.

• Banker's bank and supervisor: It supervises all the banks in India.

• Controller of Money Supply and Credit: It performs these functions by using several tools like SLR, CRR etc. (discussed later).

• Maintains stability of Foreign Value of Rupee: RBI is the custodian of country's foreign exchange reserves.

• Monetary Data and other Publications: RBI collects, collates and publishes all monetary and banking data regularly.

• RBI's Promotional Role: RBI plays an active role in strengthening country's financial  infrastructure and devising new measures in socially-desired directions.