RBI is the Apex Bank in the country. It was established on 1st April 1935. It was started as private shareholders bank. After independence, Government of India nationalized it and made it as the central bank. It is the head of all banks and financial institutions.

Mumbai is the head Office of RBI. RBI has its regional offices in Delhi, Kolkata, Mumbai and Chennai. It also has its branches in Bengaluru, Hyderabad, Lucknow and Kanpur. The present Governor of R.B.I is Dr. Subba Rao.

Functions of RBI: 

The main functions of RBI are as follows: 

It is the central bank of the country. Like any other central banks which operate in different countries, RBI functions in the same manner. It basically performs three functions.They are 

I. Traditional and primary functions. 

II. Development functions and 

III. Other functions.

I Traditional and primary functions of RBI are as follows: 

1. Printing and issuing currency notes: It has complete authority of printing and issuing currency notes in the country. RBI issue all denominations, of currency notes (Rs. 2, Rs. 10, Rs. 20, Rs. 50, Rs. 100, Rs. 500 and Rs. 1000) except one rupee note, which is issued by Finance Ministry of Central Government Minimum reserve system of note issue was followed by RBI after 1956.

2. Banker to Government: RBI works as banker to the Government. It does all activities of banking on behalf of government activities like opening account, receiving money, making payments, transfer government funds, manages public debt and also maintains accounts of expenditure of.government. It also gives credit to government Relating to financial matters, RBI gives advise to Government.

RBI also acts as agent to the Government through performing the transfer of funds from Government to beneficiaries. RBI also advises the Government during some circumstances like not to go for over expenditure during inflation.

3. Act as Bankers’ bank: All banks and financial institutions in India are under the control of RBI. It advices and gives direction on all transactions of commercial banks. All commercial banks in India have to keep certain portion of its deposits as cash reserves with RBI. All commercial banks have to submit a detailed document and report about its transactions to RBI.

As a banker’s bank RBI functions as follows:

•  Lender of last resort: RBI provides financial assistance to commercial banks like giving credit, discounting bills, giving advances, etc during their financial crisis and helps the banks as a lender of last resort. 
• Clearing House: Commercial Banks in crisis can approach RBI for loans and advances. RBI re-discounts bills and lends money to commercial banks. It also advances money on other securities.

4. Controls credit creation activities of commercial banks: The credit provided by all commercial banks is controlled by RBI. RBI implements both Quantitative and qualitative techniques to control the credit generated by commercial banks. The quantitative measures to control credit are Bank rate policy, Open market operation, Cash reserve ratio and Statutory liquidity ratio. The qualitative techniques of credit control include fixation of margin requirements for loans, introduction of a system of credit rationing, moral suasion and Direct action.

5. Controls money market: RBI is the leader of money market. All the activities and components of money market like commercial banks and financial institutions are controlled and directed by RBI.

6. In-charge of foreign exchange reserves: RBI has regular and continuous contacts with international monetary institutions relating to foreign exchange reserves. Precious foreign exchanges is preserved and protected by it.

II Developmental functions performed by RBI are as follows: 

Finance to agriculture: A separate department in RBI is engaged in providing credit and advances to agricultural sector indirectly. It operates through NABARD (National Bank for Agriculture and Rural Development) and state co-operative banks. It has taken steps to develop and reorganize co-operative societies. 

Financing industries: RBI has taken lot of interest in establishment and development of industries. Various financial institutions like IDBI, ICICI, SFC and IFC are established by RBI to cater the financial needs of industries. 

III Other functions:

1. Special functions: 

• It gives training facilities to bank staff. 
• It conducts seminars and debates on various subjects. 
• It has regular and continuous contact with international monetary institutions and takes steps to improve co- 
• operative movement in the country. 
• It studies various problems in agriculture, industry and provides ideal solutions to it.

2. Research functions of RBI are as follows:

•  It collects information on different sectors of the economy. 
• It issues periodicals regularly. 
• It issues special bulletins on various issues like supply of finance, financial matters of both Central and State Governments.