The Reserve Bank of India (RBI) is the central bank and monetary authority of India. It is responsible for the issue and supply of the Indian rupee, the regulation of the country's banking and financial system, the management of foreign exchange, and the formulation of monetary policy. The RBI is wholly owned by the Government of India and has its central office in Mumbai, Maharashtra.
| Type | Central bank |
|---|---|
| Established | 1 April 1935 |
| Nationalised | 1 January 1949 |
| Headquarters | Mumbai, Maharashtra, India |
| Founding legislation | Reserve Bank of India Act, 1934 |
| Currency issued | Indian rupee (₹, INR) |
| Owner | Government of India |
| Governing body | Central Board of Directors |
The Reserve Bank of India was established on the recommendations of the Royal Commission on Indian Currency and Finance, also known as the Hilton Young Commission, which submitted its report in 1926. The Reserve Bank of India Act was passed in 1934, and the bank commenced operations on 1 April 1935. It originally functioned as a privately owned shareholders' bank, with its first central office in Kolkata, before being permanently shifted to Mumbai in 1937.
Sir Osborne Smith served as the first Governor of the RBI. Sir C. D. Deshmukh, appointed in 1943, became the first Indian Governor. Following independence, the bank was nationalised on 1 January 1949 under the Reserve Bank (Transfer to Public Ownership) Act, 1948, bringing it fully under the ownership of the Government of India.
The affairs of the RBI are governed by a Central Board of Directors appointed by the Government of India in keeping with the Reserve Bank of India Act. The board comprises the Governor, up to four Deputy Governors, and other directors nominated by the central government. The Governor is the chief executive officer of the bank and chairs the Central Board.
The Monetary Policy Committee (MPC), constituted under the amended RBI Act in 2016, is responsible for fixing the benchmark policy interest rate (the repo rate) to contain inflation within the target set by the government. The MPC has six members, three from the RBI including the Governor as chairperson, and three external members appointed by the central government.
As the apex monetary institution of India, the RBI plays a central role in shaping the country's macroeconomic stability, financial sector regulation, and payment systems. It oversees major payment infrastructure such as the Real Time Gross Settlement (RTGS) system, the National Electronic Funds Transfer (NEFT) system, and supports the Unified Payments Interface (UPI) operated by the National Payments Corporation of India. Its policy decisions, particularly on the repo rate and cash reserve ratio, have wide-ranging effects on credit, inflation, and economic growth.