15 Informational Facts About RBI
In this article we’ll discuss some important and informational facts about RBI, i.e., The Reserve Bank of India.
Reserve Bank of India (RBI) facts
1. The Reserve Bank is the central bank; that is, it is a bank of banks and a bank for the central government as well as state governments.
2. The RBI, among other things, is also a financial sector regulator with the responsibility of ensuring that financial activity in the economy serves the larger collective good.
3. Sir Osborne Smith, the first governor of the Reserve Bank of India (1935-37), was an Australian National and remains the only professional banker to date to have been appointed to this high office.
4. Sir Benegal Rama Rau (1949-57) was the longest-serving governor of RBI to date. His tenure lasted for nearly eight years.
5. Under the Reserve Bank Act, the governor can be appointed for a term not exceeding five years and can be reappointed.
6. The Indian currency notes carry a promise from the RBI Governor. For example, a ₹100 note has a promise on it saying, “I promise to pay the bearer a sum of ten rupees.” This means that the currency note is legal tender and will be accepted as a medium of exchange on the trust of the Reserve Bank.
7. Duvvuri Subbarao was the first governor of the Reserve Bank of India born after Independence.
8. The Reserve Bank has these three important departments: the monetary policy department, the department of economic policy and research, and the department of statistics and information management.
9. Dr Manmohan Singh, the former governor of the Reserve Bank, holds a unique record of not only being the finance minister of India during the prime ministership of PV Narasimha Rao but also as the PM of India from 2004-14.
10. The two policy rates, i.e., the repo rate, the rate of interest charged on commercial banks when they borrow overnight from the Reserve Bank, and the reverse repo rate, the rate of interest paid to banks when they deposit money overnight with the Reserve Bank, are important for the RBI to calibrate the monetary policy stance.
11. The Reserve Bank prints and distributes currency, but it does a lot of other things like:
• It is the monetary authority of the country, which means its main job is to keep inflation under control while also supporting growth.
• It is the gatekeeper of the external sector, which entails monitoring and regulating capital inflows and outflows and keeping the exchange rate steady.
• It regulates and supervises banks.
• It regulates non-banking financial companies and segments of the financial markets.
12. Under law, the Reserve Bank is not fully autonomous. The RBI Act lays down that: The Central Government may give directions to the Reserve Bank where considered necessary in the public interest to do so, but after consultation with the Governor.
13. The Reserve Bank is not a for-profit organization, and creating a profit is not one of its goals. However, the Reserve Bank makes “surplus profits” that are, by law, given to the government.
14. The interest the RBI receives on its holdings of government securities, its overnight lending to commercial banks, and the returns on its foreign currency assets are its key sources of income.
15. Foreign exchange reserves held by the Reserve Bank are made up of gold, foreign currency holdings, and Special Drawing Rights (SDRs) issued by the IMF (International Monetary Fund).
I hope you have gained something new from these facts about the RBI. Thanks for reading. Jai Hind.
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