RESERVE BANK OF INDIA

RBI Logo, Source: Wikipedia

We all believe in our bank, they will pay us the money when we required but actually what's the big deal, if they say that there is no money in the bank. So we won't pay you money. You are now thinking of your mind how in the world, the bank will run out of money. Ya definitely.  it's possible because banks can even bankrupt if they have more non-performing loans. To handle these kinds of situation to benefit both the customer and the bank the Reserve Bank of India(RBI) acts as a Central bank of India to regulate all the Banks with their policies.

History of RBI:

An Interesting fact is that the RBI is actually established by the Britishers by the "RBI Act 1934" based on the recommendations of the Hilton-Young Commission. At the Begining, the RBI was actually a Private Owned bank during the British time. But later after the Independence of India it was nationalized on 1 January 1947 and completely owned by the Government of India to regulate and maintain the financial stability of India and fully owned by the Govt of India.

Symbol of RBI:

Double Mohur, source: Wikipedia

The Symbol of RBI also has the traces of the Britain Empire When the Established the RBI the symbol of the RBI was a Double Mohur i.e, Britain's Lion with a Plam Tree. After the Independence, the Lion was replaced with the National Animal of India "The Tiger".

Objectives of RBI:

The RBI is Vested with so many powers to maintain the Financial Stability and to control Inflation in India. To achieve these RBI has so many policies and functions.

Functions of RBI:

The various functions of the RBI:

Financial Supervision:

The First and foremost function of the RBI is to supervise the scheduled banks, commercial and non-commercial banks their by supervising the financial stability of the Nation.

Regulator and supervision of the Financial system:

To perform effective control over the nation in the field of liquidity(money) we need to have a special well designed Rules and regulations and policies. For this, the RBI had a separate framework in which the banks in India following till today.

Regulator supervisor of the Payment systems:

The Payment of the money to another person or to other banks was done through two kinds of Payment systems they are the National Electronic Fund Transfer(NEFT) and the Real Time Gross Settlement(RTGS). Both these two types of payment system helps the RBI to control and to regulate the money flow into the banks and also the economy.

Banker and Debt manager for the Government:

To maintain the financial work and to assist the Govt of India, RBI was set up as the Bank for the Govt of India. They are regulating all the financial transactions of the Govt.

Issue of Currency:

RBI is vested with the powers to print and issue currency and make them pump into the economy. Currently, RBI has four Printing and Minting centres in India and so on.

How they Do it:

To regulate the Liquidity(Money) flow into the  Economy the RBI controls the Banks thus controlling the Money flow in the Indian Economy. They control the flow of the money with such as 

• Repo Rate(1)
• Reverse Repo Rate(2)
• Cash Reserve Ratio(3)
• Statutory Liquidity Ratio(4)
• Bank Rate(5)
• Open Market Operation(6)
• Liquidity Adjustment Facility(7)
• Marginal Standing Facility. (8)

Hope you now understand how RBI plays a vital role in India's economy. Feel free to share your reviews in the comment section below either good or bad, share if you like it. Hit the subscribe button on the top to receive our updates in your inbox. Happy Economics(5).....