Reserve Bank of India as a Central Bank of the Country :

The Reserve Bank of India (RBI) was set up on the basis of the recommendations of the Hilton Young Commission. The RBI Act, 1934 provides the statutory basis of the functioning of the Bank, which commenced operations on April 1, 1935. The RBI, which was originally set up as a shareholder’s bank, covered the entire undivided India. It replaced the Imperial Bank of India and started issuing the currency notes and acting as the banker to the government. Imperial Bank of India was allowed to act as the agent of the RBI. Thereafter, in order to have close integration between policies of the Reserve Bank and those of the Government, it was decided to nationalize the Reserve Bank immediately after the independence of the country. From 1st January 1949, the Reserve Bank began functioning as a State-owned and State-controlled Central Bank. To further streamline the functioning of commercial banks, the Government of India enacted the Banking Companies Act,1949 which was later changed as the Banking Regulation Act 1949.

Since its inception, RBI has been instrumental in the overall development of the Indian economy institutional development. It acts as a regulator of banks, controller of financial systems, banker to the Government and banker’s bank. RBI focuses in areas like Monetary Policy, Bank Supervision and Regulation and monitoring developments in the financial markets.