2. INTRODUCTION AND ORIGIN OF CENTRAL BANK
• The Development of ‘Banking’ is evolutionary in nature. There is no single answer to the
question of what is banking. Because, a bank performs a multitude of functions and
services which cannot be comprehended into a single definition. For a common man, a
bank means a Storehouse of Money, for a Businessman it is an Institution of Finance and
for a Worker it may be a depository for his Savings.
• The Origin of the word Bank can be traced as follows:
BANCK- German (Joint Stock Fund)
BANCO- Italian (Heap of Money)
BANCUS/ BANQUE- French (Bench/ Chest a place where valuables are kept)
3. RESERVE BANK OF INDIA.
• The Reserve Bank of India (RBI) is India's central banking institution, which
controls the issuance and supply of the Indian rupee. Until the Monetary
Policy Committee was established in 2016, it also controlled monetary
policy in India. It commenced its operations on 1 April 1935 in
accordance with the Reserve Bank of India Act, 1934. The original share
capital was divided into shares of 100 each fully paid, which were initially
owned entirely by private shareholders. Following India's independence
on 15 August 1947, the RBI was Nationalized on 1 January 1949.
• The bank is often referred to by the name 'Mint Street'. RBI is also known
as banker's bank.
• PREAMBLE- The preamble of the Reserve Bank of India describe the basic
functions of the Reserve Bank as “To Regulate the issue of Bank Notes and
keeping of reserve with a view to securing monetary stability in India and
generally to operate the currency and credit system of the country to its
4. THE HISTORICAL ANTECENDENTS OF CENTRAL BANKING IN INDIA
• In India, the efforts to establish a banking institution with central
banking character dates back to the late 18th century. The Governor of
Bengal Warren Hastings in British India recommended the
establishment of a General Bank in Bengal and Bihar. The Bank was set
up in 1773 but it was short-lived.
• CHAMBERLAIN COMMISSION (1914)- It was in the early 20th
century that, consequent to the recommendations of the “Chamberlain
Commission” (1914) proposed the amalgamation of the three
Presidency Banks:
BANK OF BENGAL - 1809 CAPITAL - £ 5,00,000
BANK OF BOMBAY - 1840 CAPITAL - ₹ 52,25,000
BANK OF MADRAS - 1843 CAPITAL - ₹ 30,00,000
5. • In 1920, the “Imperial Bank of India Act” was passed for Amalgamating the Three
Presidency Banks. As such, the ‘Imperial Bank of India’ was established in 1921. It
was given power to hold government funds and manage the Public Debt.
• RECOMMENDATIONS OF THE HILTON YOUNG COMMISSION
(1926):
In 1926, the Royal Commission on Indian Currency and Finance (Hilton Young
Commission) recommended that the dichotomy of functions and divisions of
responsibilities for control of currency and credit should be ended. The Commission
suggested the establishment of a central bank to be called the Reserve Bank of India,
whose separate existence was considered necessary for augmenting banking
facilities throughout the country.
6. ESTABLISHMENT OF RESERVE BANK OF INDIA
• The Bill to establish the RBI was introduced in January 1927 in
the Legislative Assembly, but it was dropped due to differences
in views regarding Ownership, Constitution and Composition of
its Board of Directors.
• Finally, a Fresh Bill was introduced in 1933 and passed in 1934.
The RBI Act came into force on January 1, 1935. The RBI was
inaugurated on April 1, 1935 as a Shareholders’ Institution and
the Act provided for the appointment by the Central Government
of the Governor and Two Deputy Governors. The RBI was
Nationalized on January 1, 1949 in terms of the Reserve Bank of
India (Transfer to Public Ownership) Act, 1948 (RBI 2005b).
8. GOVERNORS OF RBI:
• First Governor of RBI:
Sir Osborne A. Smith
April 1, 1935 to June 30,
1937
• Present Governor of RBI:
Shaktikanta Das
December 12, 2018
Onwards
9. ORIGINAL HEADQUARTERS OF RBI
•Original headquarters of RBI were in Kolkata, but
in 1937, it was shifted to Shahid Bhagat Singh
Marg, Mumbai, which serves as current
headquarters of RBI.
•The Main Functions of the RBI, as laid down in the
statutes:
a)Issue of currency.
b)Banker to Government, including the function of
debt management.
10. OBJECTIVE AND REASONS FOR ESTABLISHMENT OF RBI
• To manage the Monetary and credit system of the country
• To stabilize Internal and External value of Rupee
• For balanced and systematic development of banking in the country
• For the Development of organized Money Market in the country
• For proper arrangement of Agriculture Finance
• For proper arrangement of Industrial Finance
• For proper management of Public Debt
• For Centralization of Cash Reserves of commercial banks
• To maintain balance between Demand and Supply of Currency
11. CONCLUSION
• Central Bank plays an important role in achieving
economic growth of a developing country
• It promotes economic growth with stability
• RBI is an autonomous body promoted by the
government of India
• It is the primary regulator for Banking and Non-
Banking financial Institutions.
