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RBI: Structure & Function, Subsidiaries of

RBI Final
About RBI
• Reserve Bank of India (RBI) is the Central Bank of our country.
• It was established on April 1935 under the RBI Act of 1934 with a share capital of Rs.
5 crores on the recommendations of the Hilton Young Commission.
• It is entrusted with monetary stability, the management of currency and the
supervision of the financial as well as the payments system.
• RBI is an institution of national importance and the pillar of the surging Indian
economy.
Central Board of Directors
➢ RBI’s affairs are governed by a central board of directors. The board is appointed by
the Government of India in keeping with the Reserve Bank of India Act.
➢ Central Board consists of:
• Governor: Shaktikanta Das was the 25th Governor of RBI
• 4 Deputy Governors:
o T. Rabi Sankar
o M. Rajeshwar Rao
o Dr. M. D. Patra
o M. K. Jain
• 2 Finance Ministry representatives
• 4 directors to represent local boards headquartered at Mumbai, Kolkata, Chennai, and
New Delhi
Functions of RBI
1. Monetary Authority of India:
• RBI Formulates, implements and monitors the monetary policy of India.
• Objective of the monetary policy is to maintain price stability while keeping in mind the
objective of growth.
• RBI uses various direct and indirect instruments for implementing monetary policy are:
o Repo Rate
o Reserve Repo Rate
o Marginal Standing Facility
o Liquidity Adjustment Facility
o Bank Rate
o Cash Reserve Ratio
o Open Market Operations
o Market Stabilization Scheme
2. Regulates and supervise the financial system
• RBI regulates the commercial banks, co-operative banks, and certain category of Non-
Banking Financial Companies (NBFCs).
• RBi guides broad parameters of banking operations within which India's banking and
financial system functions.
• Objective: Maintain public confidence in the financial system, protect depositors'
concern and provide cost-effective banking services to the public.
3. Manager of India's Foreign Exchange:

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• RBI manages the Foreign Exchange of India under the Foreign Exchange Management
Act, 1999 (FEMA).
• RBI facilitates external trade and payment and promotes the development and
maintenance of the foreign exchange market.
4. Issuer of Indian currency
• RBI is the central bank of India and is responsible for issuing, exchanging or destroying
currency and coins not fit for circulation.
• RBI make sure to provide the public with an adequate quantity of supplies of fit
currency notes and coins.
5. Developmental role in the Indian Economy
• RBI performs a wide spectrum of promotional functions to support the national
objectives of India.
6. Regulates and Supervises Payment and Settlement System of India:
• It is RBI's responsibility to proposes and promotes safe and efficient modes of payment
systems in the country.
• RBI makes certain to maintain the public confidence in the payment and settlement
system of India.
7. Other Functions:
• Banker to the Government: RBI performs all the banking function for the central and
the state governments of India. In other words, RBI acts as their banker.
• Banker to banks: RBI maintains banking accounts of all scheduled commercial banks
of India.
Powers of Reserve Bank of India
Reserve Bank of India Act, 1934 and Banking Regulation Act, 1949 have given RBI wide
powers of Supervision and Control over commercial Banks relating to:
• licensing and establishments
• branch expansion
• liquidity of their assets
• management and methods of working
• amalgamation (merger)
• reconstruction and liquidation.
Important Acts of RBI
Following are the acts administered by the RBI:
• Reserve Bank of India Act, 1934
• Government Securities Regulations, 2007
• Banking Regulation Act, 1949
• Foreign Exchange Management Act, 1999
• Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SERFESI Act)
• Credit Information Companies(Regulation) Act, 2005
Subsidiaries of RBI
Subsidiary company is an organization which is owned or controlled by any other
company. Following are the fully owned subsidiaries of RBI:
1. Deposit Insurance and Credit Guarantee Corporation of India (DICGC)
2. Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
3. Reserve Bank Information Technology Private Limited (ReBIT)
4. Indian Financial Technology and Allied Services (IFTAS)
Note: Now, NHB (National Housing Bank) is wholly owned by Govt. of India as after 24
April 2019 notification of RBI.
1. Deposit Insurance and Credit Guarantee Corporation of India (DICGC)
• Establishment: 15th July 1978.

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• Headquarters: Mumbai
• DICGC was formed by merging Deposit Insurance Corporation (DIC) and Credit
Guarantee Corporation of India Ltd. (CGCI).
• Functions of the DICGC are governed by the provisions of DICGC Act 1961 framed by
Reserve Bank of India.
• DICGC was established for providing insurance of deposits and guaranteeing of credit
facilities.
2. Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
• Establishment: 3rd February 1995.
• Headquarters: Bengaluru.
• BRBNMPL has been registered as a Private Limited Company under Companies Act
1956.
• To augment the production of bank notes in India to enable the RBI to bridge the gap
between the supply and demand for bank notes in the country.
• The company manages 2 Presses one at Mysore in Karnataka and the other at
Salboni in West Bengal.
• Apart from this, RBI has two more printing press both owned by Government of India:
Nasik (Maharashtra) and Dewas (Madhya Pradesh).
• Coins are minted in four mints owned by the Government of India. The mints are
located at Mumbai, Hyderabad, Calcutta and NOIDA.
3. Reserve Bank Information Technology Private Limited (ReBIT)
• Established: 2016
• ReBIT deliver and manage IT projects of RBI.
• It assists RBI in performing risk-based supervision of regulated entities; Safeguard RBI
assets by detecting and responding to cyber-threats.
4. Indian Financial Technology and Allied Services (IFTAS)
• Financial Technology and Allied Services (IFTAS) is a wholly owned subsidiary of
the Reserve Bank of India, mandated to design, deploy & support IT-related services to
the Reserve Bank of India, and all Banks and Financial Institutions in the country.
• The IFTAS has taken over the INdian FInancial NETwork (INFINET), Structured
Financial Messaging System (SFMS) and the Indian Banking Community Cloud (IBCC)
from the IDRBT (from April 01, 2016).