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In 1921, the three Presidency banks were amalgamated to form Imperial Bank of India viz. Bank of Calcutta, Bank of Bengal and Bank of Madras. J.M.Keynes was the first economist who recommended formation of central bank in India as a whole. Accordingly, Hilton Young Commission was recommended for setting up of a central bank known as RBI. Govt had Central Banking Committee in 1931. After submission of the report of Central Banking Committee , RBI Act was passed in
RBI was designed on the lines of Bank of England popularly known as Mother of Central Bank. The Executive Head of RBI is known as Governor and the day to day working of RBI is governed by Board of Directors. RBI performs traditional & non-traditional (promotional) functions. The Traditional functions include: 1.Issue of Currency 2.Agent, Banker & an advisor to the Govt. 3.Bankers Bank 4.Control of Credit 5.Clearing House Function 6.Foreign Exchange Management & Control
Central Bank
1. Issue of Currency: Under Proportional Reserve System 40% of the total reserves should in Gold coins & Bullions & the remaining 60% in Foreign Exchange Assets/ foreign Securities. At any time, Gold Securities should not be less than rs. 40 crores. However, this system was unable to strike the balance between the ratio 40:60 & thus in 1956 it was replaced by the Minimum Reserve system. Under Minimum Reserve system, Issue Dept. has to maintain minimum assets of Rs. 515 crores of which share of Gold should not be less than Rs. 115 crores & remaining is
1. Issue of Currency: Under Proportional Reserve System 40% of the total reserves should in Gold coins & Bullions & the remaining 60% in Foreign Exchange Assets/ foreign Securities. At any time, Gold Securities should not be less than Rs. 40 crores. However, this system was unable to strike the balance between the ratio 40:60 & thus in 1956 it was replaced by the Minimum Reserve system. Under Minimum Reserve system, Issue Dept. has to maintain minimum assets of Rs.
the Govt.:
RBI as a Banker is making the payments for & accept receipt on behalf of the Govt. of India. As an Agent, RBI provides short-term as well as long-term loans to the Govt. As an Agent of the Govt, it represents Govt on various International Financial Conferences & International Financial Institutions such as World Bank, IMF & so on. As an Advisor, it advises Govt on various Banking & Financial matters such as financing the Five Year Plan, raising the resources through various sources & in managing public borrowing or public debt. It advises the Govt regarding the quantity,
It is the apex monetary institution of the highest authority in India. Consequently it plays an important role in strengthening, developing & diversifying the countrys economic & financial structure. It is responsible for the maintenance of economic stability & assisting the growth of the economy. It is Indias eminent public financial institution given the responsibility for controlling the countrys monetary policy. It acts as an advisor to the govt. in its economic & financial policies & it also represents the country in the international
It is responsible for the development of an adequate & sound banking system in the country & for the growth of the organised money & capital markets. India being a developing country, the RBI has to keep inflationary trends under control & to see that main priority sectors like agriculture, exports & small scale industry get credit at cheaper rates. It has also to protect the market for govt. securities & channelize credit in desired directions.