The Reserve Bank of India was established on April 1, 1935 according to the Reserve Bank of India Act, 1934. The chief of RBI is RBI governor. Main functions of RBI are given below:
- Banker to the Government: RBI performs merchant banking function for the central and the state governments and also acts as their banker.
- Banker to banks: RBI maintains banking accounts of all scheduled banks.
- Monetary Authority: RBI formulates implements and monitors the monetary policy of India. The objective is to maintain price stability and ensure adequate flow of credit to productive sectors.
- Regulator and supervisor of the financial system: RBI prescribes broad parameters of banking operations within which the country's banking and financial system functions. This is to maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.
- Regulator and supervisor of the payment systems: RBI authorises setting up of payment systems
- RBI lays down standards for operation of the payment system. Issues direction, calls for returns/information from payment system operators.
- RBI acts as the manager of Foreign Exchange based on the Foreign Exchange Management Act, 1999. This is to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
- Issuer of currency: Issues and exchanges or destroys currency and coins not fit for circulation. This is to give the public adequate quantity of supplies of currency notes and coins and in good quality.
http://tutioncentral.com/study-materials/banking-basics