Reserve Bank of India (RBI)
How Reserve Bank of India Came Into Existence? Reserve Bank of India – History of RBI. Welcome to the LST online Study Portal. If you are preparing for SBI, IBPS, LIC, SSC, Railway and others competitive Exams, you may find some questions related to Reserve Bank of India and its history. Questions based on Reserve Bank of India – History of RBI form a part of the Banking Awareness section of many Govt. and Bank exams.
This article“How Reserve Bank of India Came Into Existence? – History of RBI” is also important for other banking exams such as SBI PO, IBPS Clerk, SBI Clerk, IBPS RRB Officer, IBPS RRB Office Assistant, IBPS SO, SBI SO, SSC CGL, SS CHSL, MTS and other competitive exams.
What is Reserve Bank of India(RBI)?
Several attempts were made from time to time to set up a Central Bank in India prior to 1934.But unfortunately these attempts failed to bear any fruit. In 1921, the Government of India established the Imperial Bank of India to serve as the Central Bank of the country. But the Imperial Bank did not achieve any appreciable success in its functioning as the Central Bank of the country.
History of RBI
In 1925, the Hilton Young Commission was asked by the Government to express its views on the subject. The commission made out a forceful case for the establishment of a brand new Central Bank in the country. According to the Commission, it was not desirable to keep the control of currency and credit in the hands of two separate agencies. The Government of India controlled currency while the Imperial Bank regulated credit prior to the establishment of the Reserve Bank of India in April 1st, 1935.
The Hilton Young Commission did not consider this double control on currency and credit asa desirable feature of the Indian monetary system. It was on this account that the Commission recommended the transfer of the control of currency and credit to a new Central Bank to be set up in the country. It was on this account that the Commission recommended the establishment of the Reserve Bank of India as the Central Bank of the country.
The Government of India while accepting the recommendations of the Commission brought forward a Bill before the Central Legislature. But the Bill could not be passed on account of differences amongst the members of the legislature. The Government of India, therefore, postponed the idea of a new Central Bank for sometime. In 1929, the Central Banking Enquiry Committee again made a forceful plea for the establishment of the Reserve Bank. Consequently, the Reserve Bank of India Act was passed in 1934, and the Reserve Bank started functioning from 1st April, 1935.
You may also like : What is a Central Bank? Meaning and Functions of Central Bank
The Reserve Bank of India is the kingpin of the Indian money market. It issues notes, buys and sells government securities, regulates the volume, direction and cost of credit,manages foreign exchange and acts as banker to the government and banking institutions.
The Reserve Bank is playing an active role in the development activities by helping the establishment and working of specialised institutions, providing term finance to agriculture,
industry, housing and foreign trade. In spite of many criticisms, it has successfully controlled commercial banks in India and has helped in evolving a strong banking system. A study of the Reserve Bank of India will be useful, not only for the examination, but also for understanding the working of the supreme monetary and banking authority in the country.
You may also like : What is Bank? Meaning of Bank, Types of Banks
Meaning of Reserve Bank of India(RBI)
Meaning of Reserve Bank of India :- The Reserve Bank of India (RBI) is the central bank of India, which was established on April 1, 1935, under the Reserve Bank of India Act. The Reserve Bank of India uses monetary policy to create financial stability in India, and it is charged with regulating the country’s currency and credit systems.