Role of Rbi in Creidit Control

Role of RBI in control of credit
• History
• Introduction
• Structure
• Functions
• Demonetisation
• Credit Control
• Need
• Limitations
• Current Rates
• Objective
• Conclusion
History of reserve
bank of India
The origins of the Reserve Bank of India can be traced to 1926 when
the Royal Commission on Indian Currency and Finance – also known
as the Hilton-Young Commission – recommended the creation of a
central bank for India to separate the control of currency and credit
from the Government and to augment banking facilities throughout
the country. The Reserve Bank of India Act of 1934 established the
Reserve Bank and set in motion a series of actions culminating in the
start of operations in 1935. Since then, the Reserve Bank’s role and
functions have undergone numerous changes, as the nature of the
Indian economy and financial sector changed.
There were several causes for the creation of a central bank. Though
the rupee was the common currency, there were several species of
rupee coins of different values in circulation. The authorities,
however, endeavored to evolve a standard coin. For many years, the
Sicca of Murshidabad was, in theory, the standard coin, and the rates
of exchange of the various rupees in terms of the Sicca rupee varied,
the discount being called the batta.
The Government received enquiries from the Collectors as to the
batta they should charge on the different species they received from
zamindars and farmers. The proposed bank was to fix the value, in
Sicca rupees, of the bills it had to issue in return for the money
received from the Collectors, on the basis of the same batta. Thus, the
bank was expected to assist in stabilizing inland exchange and in
enforcing the Sicca coin as the standard coin of the Provinces.
The Reserve Bank of India is the central bank of the country. Central banks are a relatively recent innovation and most central
banks, as we know them today, were established around the early twentieth century.
The Reserve Bank of India was set up on the basis of the recommendations of the Hilton Young Commission. The Reserve
Bank of India Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank, which commenced operations
on April 1, 1935.
The Bank began its operations by taking over from the Government the functions so far being 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.
With liberalisation, the Bank's focus has shifted back to core central banking functions like Monetary Policy, Bank Supervision
and Regulation, and Overseeing the Payments System and onto developing the financial markets.
Reserve bank of
india
The Reserve Bank of India (RBI) is India's central bank and
regulatory body under the jurisdiction of Ministry of Finance,
Government of India. It is responsible for the issue and supply
of the Indian rupee and the regulation of the
Indian banking system. It also manages
the country's main payment systems and works to promote its
economic development. Bharatiya Reserve Bank Note Mudran
is one of the specialised divisions of RBI through which it mints
Indian bank notes and coins.
Until the Monetary Policy Committee was established in 2016, it
also had full control over monetary policy in India. It
commenced its operations on 1 April 1935 in accordance with
the Reserve Bank of India Act, 1934. The original share capital
was divided into shares of 100 each fully paid. Following India's
independence on 15 August 1947, the RBI was nationalised on
1 January 1949.
The overall direction of the RBI lies with the 21-member central
board of directors, composed of: the governor; four deputy
governors; two finance ministry representatives (usually the
Economic Affairs Secretary and the
Financial Services Secretary); ten government-nominated
directors; and four directors who represent local boards for
Mumbai, Kolkata, Chennai, and Delhi. Each of these local
boards consists of five members who represent regional
interests and the interests of co-operative and indigenous
banks.
It is a member bank of the Asian Clearing Union. The bank is
also active in promoting financial inclusion policy and is a
leading member of the Alliance for Financial Inclusion (AFI).

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