What is the importance of RBI in Indian Economy?

Take a look at the list of  prominent RBI Governors

The Indian banking structure is very vast and most widely accessed by all the sectors of the country. Apart from serving for the benefit of the economy, it is also responsible for maintaining transparency on monetary matters. The banking system is governed by the apex body Reserve Bank of India that is responsible for monitoring, governing and managing the complete functioning of the Indian banking system.

The Reserve Bank of India (RBI) is the central bank which on a broader note governs and manages the financial system of the country. It was established in 1935 and was recommended by the Hilton-Young commission and works under the Reserve Bank of India Act, 1934.

The main motive behind the appointment of the apex body was to keep pace with the economic changes and challenges by optimizing and modernizing the monetary policy.

The RBI is under complete ownership and operation of the government of India and it is managed by a 21-member central board of directors. These boards are appointed under the Reserve Bank of India Act by the government of India. The RBI has its headquarters based in Mumbai since 1937 and operates through 19 regional offices and 9 sub-regional offices. The present governor of RBI is Shaktikanta Das.

Organizational Structure of RBI

The hierarchy of RBI is headed by a Governor and four deputy governors. The structure is as follows:

• Governor
• Deputy Governor
• Executive Governor
• Principal Chief Generals
• Chief General Managers
• General Managers
• Deputy General Managers
• Assistant General Managers
• Managers
• Support Stuff

The central board of directors is appointed by the government of India.

Read more: An overview of taxation policy in India

List of Governors

Functions of RBI

• Being the apex body of finances in the country, RBI practices the regulatory and supervisory functions.
• Setting benchmarks and parameters for banks regarding financial operations to ensure the smooth, transparent and consistent working of all banks.
•    Keeping in the mind the best interests of the general public, the cost-effective and economic banking system is framed.
• The RBI makes rules and regulations that promote the functions of the national banking system. It strives to ensure that the financial needs of the country are met and the banks perform as expected.
• The RBI also performs other related functions like providing consultation to banks and other financial institutions on sensitive and sophisticated financial matters.
• RBI also serves as the banker of banks and provides funds to them at various rates.
• RBI of India also serves as the Chief banker, hence maintaining the banking operations and accounts of all scheduled banks across the nation.
• The supervisory functions of RBI also include periodic review of the working of commercial banks. It takes necessary steps to increase the efficiency of the commercial banks, and for the implementation of policy changes and schemes for the improvement of the banking system

Issuance of Currency

The Reserve Bank of India ensures that the optimum amount of currency is pushed into the system and also holds the responsibility to destroy and change the currency if required. RBI ensures that the currency and coins are supplied in adequate amounts and quality.

Conclusion

India follows a stringent banking structure and RBI works as the head and the only supervisor of all the banks. All the monetary decisions of India are taken by RBI as per the rules and regulations mentioned in the RBI act. All the national or private banks have to adhere to the code of conduct given by the RBI.

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