Economics - 3 - RBI

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Reserve Bank of India
Fundamental Information about RBI

RBI is an institution of national importance and the


pillar of the surging Indian economy. It is a member of
the International Monetary Fund.

•This central banking institution was established based


on the suggestions of the “Royal Commission on Indian
Currency & Finance” in 1926. This commission was also
known as Hilton Young Commission.
•In 1949, the Reserve Bank of India was nationalized and
became a member bank of the Asian Clearing Union.
Fundamental Facts About RBI

•The First Governor of RBI was Sir Osborne Smith and the
First Indian Governor of RBI was C D Deshmukh.
•The First woman Deputy Governor of RBI was K J Udeshi.
•The only Prime Minister who had been the Governor of RBI
was Manmohan Singh.
•Current Governor – Shaktikant Das
•Central Office of RBI – Mumbai
•The highest denomination note ever printed by the Reserve
Bank of India was the ₹10000 note in 1938 which was
demonetized in January 1946. The ₹10000 was again
introduced in 1954. These notes were demonetized in 1978.
Functions of RBI

The main functions of the Reserve Bank of India are as follows:

•Monetary Authority that controls Money Supply


•Issuer of currency
•Banker’s Bank
•Government’s Bank
•Lender at Last Resort
•Developmental role
•Regulator and Administrator of the financial system
•Managing Foreign Exchange
Terminology related to Money Supply

Full-bodied money
It is the type of money whose value as money is equivalent to its
value as a commodity. E.g. – Gold coin
Token Money/Credit Money/Paper Money
Value as money is much more than the value as a commodity.
E.g. – Paper Currency
Dear Money – When it is difficult to get loans.
Cheap Money – When it is easier to get loans.
Fiat Money – Currency which is issued but not backed by any
commodity
Opportunity Cost – Next Best Alternative Forgone
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