History of Reserve Bank of India


In 1926, Royal Commission on Indian Currency and Finance popularly known as the Hilton–Young Commission submitted its report and made recommendations to the British Government of India for the creation of a Central Bank.

Finally, on April 1, 1935, the Reserve Bank of India was established via the RBI Act of 1934 as the banker to the central government.

Aim to constitute RBI

  • Regulate the issue of banknotes
  • Maintain reserves with a view to securing monetary stability and
  • To operate the credit and currency system of the country to its advantage.

TimeLine of Origin of RBI

  • 1926: The Royal Commission on Indian Currency and Finance recommended the creation of a central bank for India.
  • 1927: A bill to give effect to the above recommendation was introduced in the Legislative Assembly, but was later withdrawn due to a lack of agreement among various sections of people.
  • 1933: The White Paper on Indian Constitutional Reforms recommended the creation of a Reserve Bank. A fresh bill was introduced in the Legislative Assembly.
  • 1934: The Bill was passed and received the Governor General’s assent.
  • 1935: The Reserve Bank commenced operations as India’s central bank on April 1 as a private shareholders’ bank with a paid-up capital of rupees five crores (rupees fifty million).
  • 1942: The Reserve Bank ceased to be the currency-issuing authority of Burma (now Myanmar).
  • 1947: The Reserve Bank stopped acting as a banker to the Government of Burma.
  • 1948: The Reserve Bank stopped rendering central banking services to Pakistan.
  • 1949: The Government of India nationalized the Reserve Bank under the Reserve Bank (Transfer of Public Ownership) Act, 1948.
  • 1950: Banking Companies Act, 1949 (later called the Banking Regulation Act. The act mainly focused on the development of the first five-year plan that focused on the agricultural sector. The central bank was ordered to support the economic plan with loans.

PREAMBLE of Reserve Bank of India

“to regulate the issue of Bank notes and 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; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth.”


  • Headquarters – Mumbai, Maharashtra, India
  • Established – 1 April 1935
  • Ownership – Ministry of Finance, Government of India
  • Central bank of – India
  • Governor – Shaktikanta Das, (IAS) – (25th Governor of RBI)
  • Slogan – Developing Banking
  • Financial Year – 1 July to 30 June.

Logo of RBI

The original choice for the seal of RBI was the East India Company Double Mohur, with the sketch of the Lion and Palm Tree.

However, it was decided to replace the lion with the tiger, the national animal of India.

Organisational Structure of RBI

Central Board of Directors Multiple
Governor1Shakti Kant Das (First ‘non-economists’ governor)
Deputy Governor4T. Rabi Sankar, M. Rajeshwar Rao Dr. M.D. Patra, M.K. Jain

Functions of the Reserve Bank

  • Monetary policy
  • Regulation and supervision of the banking and non-banking financial institutions, including credit information companies
  • Regulation of money, forex, and government securities markets as also certain financial derivatives
  • Debt and cash management for Central and State Governments
  • Management of foreign exchange reserves
  • Foreign exchange management—current and capital account management

Policy Rate

  • Repo Rate
  • Reverse Repo Rate (RRR)
  • Statutory Liquidity Ratio (SLR)
  • Bank Rate
  • Liquidity adjustment facility (LAF)
  • Cash Reserve Ratio (CRR)
  • Open Market Operatuin (OMO)
  • Marginal standing facility (MSF)

Other Functions

  • It is a member of the International Monetary Fund (IMF).
  • Dr. Ambedkar in his book named “The Problem of the Rupee – Its origin and its solution”. Describe the concept of Banking.
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