The Reserve Bank of India recently celebrated its 90th anniversary in Mumbai, a historic milestone.
About the Reserve Bank of India (RBI).
- The Reserve Bank of India serves as the country’s central bank and monetary authority.
- It was created on April 1, 1935, under the Reserve Bank of India Act of 1934.
- It originated from the Hilton Young Commission’s recommendations.
- Sir Osborne Arkell Smith, an Australian, was the inaugural Governor.
- He was followed by Sir C D Deshmukh, the first Indian to occupy the post.
- It is a centralised entity that helps India properly regulate its monetary and credit policies.
- The RBI’s headquarters were first located in Kolkata before shifting permanently to Mumbai in 1937.
- The RBI began as a privately held corporation before being fully nationalised in 1949.
Functions and initiatives:
- Monetary Authority: The RBI manages the economy’s money supply in order to stabilise exchange rates, maintain a healthy balance of payments, and keep inflation under control.
- Issuer of currency: Sole authority for issuing currency and combating the spread of counterfeit notes.
- Banker to the Government: Serves as a banker to both the central and state governments, offering short-term finance and financial advice.
- Lender of Last Resort: Provides banks with emergency cash during crises.
- Custodian of Foreign Exchange Reserves: Manages foreign exchange reserves and administers the Foreign Exchange Management Act of 1999 (FEMA).
- Regulator and Supervisor of Payment and Settlement Systems: Oversees the country’s payment and settlement systems to ensure their efficiency and security.
- Credit Control and Developmental Role: Increases credit availability to productive sectors and promotes financial infrastructure development.
Transformative Reforms initiated by the RBI
- Green Revolution (1960s-1970s): which supported agricultural expansion through credit facilities and improved rural credit accessibility.
- Bank Nationalisation (1969): Aims to match banking sector objectives with national policy goals.
- Priority Sector Lending (1972): Ensures timely loan flow to critical sectors of the economy.
- Economic liberalisation (1991): Opened up the economy to global markets, promoting market-oriented growth.
- Unified Payment Interface (UPI) 2016: Enabled seamless and instant transactions throughout India.
- Inflation Targeting Framework (2016): Establish inflation targets to influence monetary policy decisions.
- Bharat Bill Payment System (BBPS) was launched in 2019 as an integrated bill payment system for the convenience of customers.
- Aadhar-based eKYC (2019): Improved customer authentication processes for financial organisations.
- In 2020, the Emergency loan Line Guarantee Scheme (ECLGS) provided loan support to SMEs hit by the Covid-19 epidemic.
- The Reserve Bank of India (RBI) is considering issuing a CBDC called e₹ (digital rupee) in 2022.
- Cryptocurrency Regulation (2022): The RBI has taken a consistent stance against cryptocurrencies, arguing for an absolute prohibition (following China and El Salvador’s ban). In 2020, the Supreme Court of India lifted the RBI’s cryptocurrency restriction.
- Payment Vision 2025 Document (2023) The Payments Vision 2025 publications categorise the RBI’s goals and vision into five anchor goalposts: integrity, inclusion, innovation, institutionalisation, and internationalisation.
Source: https://www.pmindia.gov.in/en/news_updates/pm-addresses-rbi90-opening-ceremony/?comment=disable#:~:text=Shri%20Modi%20also%20released%20a,enters%20its%2090th%20year%20today.