The RBI Bank began its operations by taking over from the Government the functions performed by the Controller of Currency and from the Imperial Bank of India, the management of Government accounts and public debt.
The existing currency offices at Calcutta, Bombay, Madras, Rangoon, Karachi, Lahore and Cawnpore (Kanpur) became branches of the Issue Department. Offices of the Banking Department were established in Calcutta, Bombay, Madras, Delhi and Rangoon.
Burma (Myanmar) seceded from the Indian Union in 1937 but the Reserve Bank continued to act as the Central Bank for Burma till Japanese Occupation of Burma and later upto April, 1947. After the partition of India, the Reserve Bank served as the central bank of Pakistan upto June 1948 when the State Bank of Pakistan commenced operations. The Bank, which was originally set up as a shareholder’s bank, was nationalised in 1949.
An interesting feature of the Reserve Bank of India was that at its very inception, the Bank was seen as playing a special role in the context of development, especially Agriculture. When India commenced its plan endeavours, the development role of the Bank came into focus, especially in the sixties when the Reserve Bank, in many ways, pioneered the concept and practise of using finance to catalyse development.
The Bank was also instrumental in institutional development and helped set up insitutions like the Deposit Insurance and Credit Guarantee Corporation of India, the Unit Trust of India, the Industrial Development Bank of India, the National Bank of Agriculture and Rural Development, the Discount and Finance House of India etc. to build the financial infrastructure of the country.
Hilton Young Commission
In 1926, the Royal Commission on Indian Currency (Hilton Young Commission) recommended the establishment of a central bank to be called the ‘Reserve Bank of India’.
Original headquarters of RBI
The original headquarters of RBI were at Kolkata.
Structure & Functions of RBI
RBI is governed by the Central Board, which is appointed/nominated by the Government of India for a period of four years.
The Central Board consists of the Governor and four Deputy Governors, as official Directors. Additionally there are 14 non-official directors. 10 of them are nominated by Government from various fields and one government Official. The remaining four Directors are selected one each from four local boards.
There are four Local Boards one each for the four regions of the country in Mumbai, Calcutta, Chennai and New Delhi. Membership of the Local Boards consist of five members each. They are appointed by the Central Government for a term of four years.
While Central Board looks after general superintendence and direction of the Bank’s affairs, the function of the Local Boards is to advise the Central Board on local matters and to represent territorial and economic interests of local cooperative and indigenous banks; to perform such other functions as delegated by Central Board from time to time.