An Overview of RBI

Establishment:

The Reserve Bank of India was established on April 1, 1935 under  the Reserve Bank of India Act, 1934. Though initially RBI was privately owned, it was nationalized in 1949. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937.

Objective:

The Main objectives of the Reserve Bank is : “to regulate the issue of Bank notes and the 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.”

Central Board of RBI:

The Reserve Bank’s affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India(RBI)  Act 1934.

Constitution:

The organization and management of RBI is vested on the Central Board of Directors. It is responsible for the management of RBI.Central Board of Directors consist of 20 members. It is constituted as follows.

a) One Governor:

It is the highest authority of RBI. He is appointed by the Government of India for a term of 5 years. He can be re-appointed for another term.

b) Four Deputy Governors:

Four deputy Governors are nominated by Central Govt. for a term of 5 years.

c) Fifteen Directors:

Other fifteen members of the Central Board are appointed by the Central Government. Out of these , four directors,one each from the four local Boards are nominated by the Government separately by the Central Government.

The Central board of directors exercises all the powers of the bank. The Central Board should meet atleast six times in each year and at least once in three months. Usually, the Central Boardkeeps  a meeting in March every year at New Delhi so as to discuss the budget with the Finance Minister after its presentation in parliament. Similarly, it keeps a meeting in August at Mumbai  in order to pass the Bank’s annual report and accounts.