The Reserve Bank of India is India’s central bank. It is the apex monetary institution which supervise, regulates controls and develops the monetary and financial system of the country. The Reserve bank was established on April 1, 1935 under the Reserve Bank of India Act, 1934. Initially, it was constituted as a private share- holders* bank with a fully paid-up capital of Rs. 5 crore. But, it was nationalised on January 1, 1949.


The management of the Reserve Bank is under the control of Central Board of Directors consisting of 20 members:

(a) the executive head of the Bank is called Governor who is assisted by four Deputy Governors. They are appointed by the Government of India for a period of five years. The head office of the Reserve Bank is at Bombay,

(b) There are four local boards at Delhi, Kolkata, Chennai and Mumbai representing four regional areas, i.e., northern, eastern, southern and western respectively. These local boards are advisory in nature and the Government of India nominates one member each from these boards to the Central Board.


(c) There are ten directors from various fields and one government official from the Ministry of Finance.

The Reserve Bank of India Act, 1934 requires that there must be at least six meetings in a year and the gap between two meetings must not exceed three months. The Governor of the Reserve Bank can call a meeting of the Central Board whenever he feels it necessary. The Governor and the Deputy Governors are full-time officials of the Reserve Bank and are paid prescribed salaries and allowances. Other directors are part-time officials and are given fare and allowance to participate in the meetings.


Organisationally, the Reserve Bank operates through various departments. They are:

1. Issue Department:


Its main function is to issue and distribute the paper currency.

2. Banking Department:

This department (a) deals with the government transactions, manages public debt and arranges for the transfer of government funds ; (b) maintains the cash reserves of the scheduled banks, provides financial accommodation to the banks and functions as a clearing house.

3. Department of Banking Development:


It aims at expanding banking facilities in unbanked and rural areas.

4. Department of Banking Operations:

Its function is to supervise, regulate and control the working of the banking institutions in the country. It grants licences for opening new banks or the new branches of the existing banks.

5. Agricultural Credit Department:


It deals with the problems of agricultural credit and provides facilities of rural credit to state governments and state cooperatives.

6. Industrial Finance Department:

Its main objective is to provide financial help to the small and medium scale industries.

7. Non-Banking Companies Department:


It supervises the activities of non-banking companies and financial institutions in the country

8. Exchange Control Department:

It conducts the business of sale and purchase of foreign exchange.

9. Legal Department:


It provides advice to various departments on legal issues. It also gives legal advice on the implementation of banking laws in the country.

10. Department of Research and Statistics:

The objective of this department is (a) to conduct research on problems relating to money, credit, finance, production, etc., (b) to collect important statistics relating to various aspects of the economy; and (c) publish these statistics.

11. Department of Planning and Reorganisation:

It deals with the formulation of new plans or reorganisa­tion of existing policies for making them more effective.

12. Economic Department:

It is concerned with framing proper banking policies for better implementation of economic policies of the government.

13. Inspection Department:

It undertakes the function of inspecting various offices of the commercial banks.

14. Department of Accounts and Expenditure:

It keeps proper records of all receipts and expenditures of the Reserve Bank.

15. RBI Services Board:

It deals with the selection of new employees, for different posts in the Reserve Bank.

16. Department of Supervision:

A new department, i.e., Department of Supervision, was set up on December 22, 1993 for the supervision of commercial banks.