Objectives of RBI

Banks in India are a very important part of the economy. The Reserve Bank of India is the one responsible for all the major actions related to the growth and development of the country. Hence, it is known as the central bank of the country. The Reserve Bank of India was formed on the 1st of April in 1935. 

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Reserve Bank of India Emblem

During the initial stages, this bank was considered to be private. Until 1949, the Reserve Bank of India remained a part of the private sector. After that period of time, the Government of India nationalized the bank. The headquarters of RBI was formerly in Calcutta. However, after the completion of the nationalization, the headquarters were shifted to Mumbai. In this article, students will get to learn important details about the objectives and functions of the Reserve Bank of India. 

Some Facts About the Reserve Bank of India 

Here are some well-known facts about the Reserve Bank of India. 

• The formation of the RBI happened on the recommendation from the Royal Commission on Indian Currency and Finance in the year 1926. 

• The nationalization of the RBI took place on the 1st of January, 1949. 

• A Panther and the Palm Tree is the emblem of RBI. 

• The government of India owns the Reserve Bank of India. 

• The establishment of the RBI happened according to the Reserve Bank of India Act, 1934.

• The Reserve Bank of India happens to be a member of the Asian Clearing Union. 

• A central board of directors is responsible for controlling the RBI. 

• The term period for which the Government of India appoints the directors is 4 years. 

• The title for the Governor of Reserve Bank of India was first given to Sir Osborne Smith. 

• CD Deshmukh was the first Indian to be appointed as the Governor of RBI. 

Major Objectives of Reserve Bank of India 

Here are some of the main objectives of the Reserve Bank of India. All of these objectives are formed according to the Reserve Bank of India Act. 

• The main motto behind the establishment of the Reserve Bank of India was to regulate all the other banks in the country. The main objective was keeping a check on the reserves as well as issuing bank notes. 

• The Reserve Bank of India came into existence in order to secure the stability of the monetary conditions in the country. Operation of currency and credit system were also some of the benefits. 

• Prior to the establishment of RBI, the Imperial Bank of India and the Government of India were not able to have control of the financial system. Hence, a committee led by a young commission and Hilton shifted the responsibility to the RBI. Its main target was to regulate and control different financial policies and assist in banking development throughout the country. 

• The Reserve Bank of India was established with the main goal of being able to control the banking functions in the business sector. Hence, the main focus of the Reserve Bank of India is to issue the new currency notes. 

• Promoting the economic development and growth of the government of India was one of the major objectives of the Reserve Bank of India. 

Governing of the RBI

The Reserve Bank of India governor was the first person responsible for the entire control of the bank. However, in the current times, there is a board of directors for that task. This board is appointed in an unbiased manner by the Government of India. the organization and management of the Reserve Bank of India are entirely in the hands of this board of directors. Hence, they are considered to be responsible for the actions that are taken in the RBI. 

The board of directors situated in the Reserve Bank of India headquarters consists of a total of 20 people. There is one Governor, 4 deputy governors, and a total of 15 directors on the board.  The governor of the Reserve Bank of India has maximum authority in the bank. The person in that title is appointed by the Indian government for a tenure of 5 years in total. However, it is also possible that the person is reelected to serve for another term. The central government is responsible for the appointment of the 4 Deputy governors. It is important for the central board of these directors to provide the powers in running the Reserve Bank of India. Hence, they should be meeting at least six different times and once every 3 months. 

The Reserve Bank of India is an independent entity that is considered to be responsible for the different economic developments in the banking sector. With the information from this article, students will be able to gather all the information that they need regarding the topic.