RBI Full Form

What is the full form of RBI?

The RBI full form is the Reserve Bank of India. Every nation has its own central bank that regulates all the banks set up in that country and for India RBI i.e. Reserve Bank of India plays the same role and is known as India’s central bank as well as banker’s bank.

It was come into existence on April 1, 1935 under the provisions of the Reserve Bank of India Act, 1934. It regulates certain things that is monetary policy, national currency i.e. Indian rupee. To maintain the financial stability in India Reserve Bank of India (RBI) use their monetary policy.

  • Recommended by: Hilton Young Commission
  • RBI Act: Passed in 1934
  • Date of Establishment: 01 April, 1935
  • Current Governor: Shaktikanta Das
  • Initial HQ: Kolkata, initially it was in Kolkata
  • Present HQ: Mumbai, moved to Mumbai in 1937
  • Initial Capital: 5 Cr, by private shareholder
  • Financial Year: July to June
rbi-full-form
RBI Full Form

Latest Announcement of RBI

  • An expert committee has formed on primary urban cooperative banks and has been announced by the RBI on 16th February 2021.
  • RBI announced it monetary policy (2021-22) on 5th February 2021. Monetary Policy Committee (MPC) of the Reserve Bank of India’s (RBI) retained its repo rate and reverse repo rate at 4 per cent and 3.35 per cent respectively. The RBI has also projected the FY22 GDP growth at 10.5 per cent.

It is a very important topic from exam point of view and a lot of questions are asked from this topic in various competitive exam. In this article, we have discussed some important point that are asked very frequent.

Related Post: Important full form of Banking Terms

About RBI

RBI is a central banking organization of India of national importance as well as the pillar of Indian economy. It has a membership of the International Monetary Fund (IMF).

  • In the book “The Problem of the Rupee – Its origin and its solution” formulated by Dr. Ambedkar has the basic concept of Reserve Bank of India.
  • Credit and currency is regulated by the RBI.
  • Through cooperative banking and commercial banking, RBI gain the confidence of public in their banking system, interest of the depositors, and also avail banking services within their ability.

History of RBI (Reserve Bank of India)

In the history of RBI, we have to know how it came into existence and the way it gets its present shape. After 1919, many banks were set up but there were no government bank India at that time.

All the banks were private and there were no organization which controls this banks. They all were running their own bank according to their own rules and regulations and also there were people encounter lots of fraud incidents. Driven by the complaint received by the then British Government, they determined to formed a central body which will control all the other banks in India.

Timeline

1920: A committee was formed in 1920 named Hilton Young committee. This committee is also known as Royal commission.

1926: The Hilton Young Committee submitted its report in 1926 and suggested, there should be central bank in India which control the other banks.

1927: The report was introduced in the Legislative Assembly to make it a law. But many people disagree with it and was later withdrawn.

1933: A newly fresh bill was prepared and introduced in the Legislative Assembly with the recommendation of Indian Constitutional reforms to create a Reserve Bank.

1934: With the assent of the Governor General’s, the bill become an act.

1935: On April 01, 1935, operation of the India’s central bank was commenced by the Reserve Bank with a paid up capital of Rs 5 Cr of private shareholders’.

1942: Currency issuing authority for Burma (present name Myanmar) was ceased by the Reserve Bank in this year.

1947: The Reserve Bank discontinue as banker to the Burmese government.

1948: The Reserve Bank stopped their banking services in Pakistan.

1949: On January 01, 1949, it got nationalization under the Reserve Bank (Transfer of Public Ownership) Act, 1948 by Government of India. Here, RBI was obliged to obey the instruction of the Government of India.

2016: The RBI Act of 1934 was amended in 2016, in which the flexible inflation-targeting framework was implemented.

Functions of Reserve Bank of India

The functions of RBI are as follows:

  • It is act as an agent of issuing the currency and coins except one-rupee currency and coin (issued by Ministry of Finance and signature by the Finance Secretory on the note).
  • It is act as the agent of distribution of currency and coins that is issued by the government of India.
  • Banker of the government.
  • Bank of the banks.
  • Control the rate of inflation.
  • Regulate the exchange rate of rupee.
  • Keeps the foreign currency reserves.
  • A member of IMF in regards of the government of India.
  • Perform various developmental operations.
  • Regulate the other banks and financial system with certain methods as: License issuing, Liquidity of assets, Bank mergers, Branch expansion.

Board Members of RBI

The central board has:

Governor

4 Deputy Governors

2 members Finance Ministry

10 members appointed by governor (includes banker, businessman, economist)

4 directors to represent local boards headquartered at Mumbai, Kolkata, Chennai, and New Delhi.

The central board of directors controls the Reserve Bank of India. At the top of which is governor of Reserve Bank of India who is the executive head nominated for 4 years.

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Frequently Asked Questions (FAQs)

Q1. Who is the owner of RBI?

Ans: Initially it was owned privately but after nationalization of RBI on January 01, 1949, Government of India takes the ownership of RBI.

Q2. What does the contingency fund indicate?

Ans: RBI maintains the contingency fund (CF) to sustain in an unexpected emergency. RBI transfers the surplus amount after meeting the expenses of their own to the government of India. Generally, surplus amount is the amount of income that RBI earns with their various kinds of securities it possesses.

Q3. Who is the executive head of RBI?

Ans: The governor of RBI is the executive head of the RBI who is appointed for 4 years.

Q4. Which commission recommended for the formation of RBI?

Ans: The Hilton commission also known as Royal commission recommended for the formation of a central bank i.e. RBI.

Q5. On which year RBI got nationalization?

Ans: On January 01, 1949, RBI got nationalization.

Q6. Which bank is the central bank of India?

Ans: Reserve Bank of India (RBI) is the central bank of India.

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