Objectives of Reserve Bank of India

Can you provide me the objectives and functions of the Reserve Bank of India (RBI), which is the main and central bank of India?

[pawan]

The Reserve Bank of India is the central bank of India. Central banks are a relatively recent innovation and most central banks were established around the early twentieth century. Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India.

Objectives of the Reserve Bank of India (RBI)

The Preamble to the Reserve Bank of India Act, 1934 spells the objectives of Bank as: to regulate the issue of Bank notes and the 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.

Prior to the establishment of the Reserve Bank, the Indian financial system was totally poor on account of the inherent weakness of the dual control of currency by Central Government and of credit by Imperial Bank of India.

The Hilton-Young Commission, therefore, recommended that the distribution of functions and division of responsibility for control of currency and credit and the divergent policies in this respect must be ended by setting-up of a central bank called the Reserve Bank of India which would regulate the financial policy and develop banking facilities throughout India. Hence, the Bank was established with this primary object in view.

Functions of the Reserve Bank of India (RBI)
As per the RBI Act 1934 it performs 3 types of functions as that of any other central bank. They are,
1. Banking Functions
2. Supervisory Functions and
3. Promotional Functions.

RBI Objectives and Functions