Today is the 90th anniversary of RBI – the central bank of India. RBI was established on 1 April 1935 and is headquartered at Mumbai. The Reserve Bank of India was established under the Reserve Bank of India Act. Though privately owned initially, it was nationalised in 1949 and since then fully owned by the Ministry of Finance, Government of India (GoI).
1. Establishment and Functions of the RBI
The Reserve Bank of India (RBI) was established on April 1, 1935, based on the recommendations of the Hilton Young Commission. Its functioning is governed by the RBI Act, 1934. Initially, the RBI took over the functions of the Controller of Currency and the Imperial Bank of India. Over time, it became the banker to the government and the manager of public debt, playing a crucial role in the country’s financial system.
2. Evolution and Role of the RBI
After India’s independence, the RBI was nationalized in 1949. It also served as the central bank of Burma (Myanmar) until 1947 and Pakistan until 1948. The RBI played a key role in establishing various financial institutions, including 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, and the Discount and Finance House of India. With the liberalization of the Indian economy since the 1990s, the RBI has focused on core central banking functions, such as monetary policy, bank supervision and regulation, overseeing the payments system, and developing financial markets.
3. Logo and Symbolism of the RBI
The RBI has a logo featuring a lion and a palm tree, derived from the East India Company’s coinage. The logo also includes the words ‘Reserve Bank of India’ in Hindi and English, along with the year of establishment, 1935. This logo symbolizes the strength and stability of the RBI. The East India Company was a British trading company that ruled India for nearly two centuries until the Indian Rebellion of 1857.
4. Mascots of the RBI
The RBI has introduced a mascot called Money Kumar, an animated roll of money. Money Kumar’s female equivalent is Ms. Money. This mascot was unveiled by Amitabh Bachchan in an episode of Kaun Banega Crorepati (KBC) during its 13th season.
5. Demonetization Power of the RBI
The RBI holds the power to demonetize banknotes in India. It has exercised this power twice in the past, specifically in 1938 and 1978 when it withdrew the notes of Rs. 5,000 and Rs. 10,000 from circulation. Although these notes were reintroduced in 1954, they were once again demonetized in 1978. While the RBI has the authority to print such notes according to the RBI Act of 1934, it has not done so since then. The most recent demonetization was implemented by the government in 2016, invalidating the notes of Rs. 500 and Rs. 1,000.
6. The RBI Museum
The RBI maintains a museum in Mumbai dedicated to showcasing the history of money and banking in India. The museum displays a wide range of exhibits, including coins, banknotes, stamps, instruments, documents, and photographs. It also features interactive kiosks, audio-visual displays, and games to educate visitors about the RBI and its functions. The museum was inaugurated in 2004 and is open to the public from Tuesday to Sunday, between 10:45 am and 5:15 pm.
7. The RBI Staff College
The RBI operates a staff college in Chennai, established in 1963. This institution provides training and education to RBI officers and other central bankers from India and abroad. The staff college is also involved in conducting research and publishing journals and books on various aspects of central banking. Participants can benefit from the college’s library, computer center, gymnasium, and swimming pool.
8. The RBI Mint
The RBI operates a mint in Mysore, established in 1995, which is responsible for producing banknotes and coins. In addition to regular currency, the mint also manufactures commemorative coins and medals for the government and other organizations. Equipped with state-of-the-art technology and security features, the mint has the capacity to produce 16 billion pieces of banknotes and 6 billion pieces of coins annually, ensuring the quality and authenticity of the currency.
9. Centre for Advanced Financial Research and Learning (CAFRAL)
The RBI houses an independent research wing known as the Centre for Advanced Financial Research and Learning (CAFRAL). CAFRAL conducts research and analysis on various topics related to the Indian economy, including inflation, growth, fiscal policy, external sector, financial markets, and monetary policy. It serves as a valuable resource for enhancing understanding and knowledge in the field of finance.
10. Rare Coin Collection
The RBI possesses a collection of rare and ancient coins, which are displayed in its museum and regional offices. This collection includes coins from the Mauryan, Gupta, Mughal, and British periods, as well as foreign coins. The oldest coin in the collection dates back to the 6th century BC, offering a glimpse into the rich numismatic heritage of India.