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| Central bankof india |
Every country has central bank, which controls and regulate the all financial act and has authority on all other commercial bank. the central bank is called central because it occupies the central position in monetory terms, central bank act on the behalf of central government in internationally. central bank control the credit in country to safeguar the financial stability of country.
In india RBI is central bank which guides the central and state government. RBI was established on 1st april 1935. In the year 1949 RBI was wholly owned by the govrnment of india,RBI was initially established in calcutta and in the year 1937 it permanently shifted to mumbai.
ROLE OF RBI IN INDIA
1. RBI holds india's eminent public finanacical institution to control the monetory policy of india.
2. It maintain the economic stability and growth of economy.
3. Controller of credit in india.
4. Advisor to governmnet
5. It act as guidance of commercial bank.
6. It plays the important role in developing, diversifying and strengthening the country's economy.
FUNCTION OF CENTRAL BANK OF INIDA (RBI)
The following function are described by the preamble of Reserve Bank of India.
1. Issuer of currency.
2. Governments bank, Agent, Adviser.
3. Banker of bank .
4. Custodian of foreign exchange reserves.
5. Clearing house.
6. Controller of credit.
7. Lender of last resort.
1. Issuer of currency
RBI is the sole authority of issuing currency except one rupee coin and subsidiary of that coin. The central bank has to maintain reserve of gold, Foreign exchange and silver against the issue of currency. RBI need to supply note according to need otherwise it leads to inflation I.e
rise in General prices.
2. Government bank, Agent , Adviser
RBI acts as bank, Agent, Adviser to the government. It receive deposits and provides loans and advances to government. The central bank render services to government. It also sell treasury Bill on the behalf of government in order to balnce the excess liquidity in the economy.
3. Banker of bank
The central bankof India has been vested with extensive power to control and supervise commercial bank system. It provides financial guidance to all commercial bank. Commercial bank is required to maintain some pecentage CRR and SLR with RBI, At the time of emergency commercial bank can get reserves from RBI.
4. Custodian of foreign exchange reserves
RBI need to maintain the value of rupee in international level. It has has authority to enter into exchange transaction on account of government or/and on own account.
5. Clearing house
RBI acts as the clearing house to settle the internal bank indebtness. RBI keep the cash balance for each commercial bank to settle each other commercial banks debt or can transfer funds from one bank to anothe bank through RBI.
6. Controller of credit
Control of credit is important function of RBI. Credit is created by the commercial bank and RBI control the credit. It necessary to control the credit because it affect the business and purchase power of general people over all. RBI has adopted twommwthos to control the credit
I. Quantitative or General credit control
II. Qualitative or selective credit control
7. Lender of last resort
RBI act as the lender of last resor, At the time of financial difficulties I can borrow from RBI for temporary. RBI is alway act as lender of last resort
DID YOU KNOW HOW RBI CONTROL THE CREDIT
WHY CAN'T RBI PRINT UNLIMITED NOTES
TO THE ANSWER
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