In 1926, the Royal Commission on Indian Currency and Finance which is also known as the Hilton-Young Commission recommended the creation of a central bank mainly to separate the control of currency and credit from the government and extend banking facilities throughout the country. The Reserve Bank of India (RBI) was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India act, 1934 with a Share Capital of 5 crore, divided into shares of 100 each fully paid up. It is a statutory body. The RBI plays role of regulator of the banking system in India. The Banking Regulation Act 1949 and the RBI Act 1953 has given the RBI the power to regulate the banking system.The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India. Reserve Bank of India has 26 departments which focus on policy issues in the Reserve Bank’s functional areas and internal operations It has 19 regional offices and 9 sub-offices.
The Reserve Bank’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.
Board of Financial Supervision (BFS): The Board was constituted in November 1994 as a committee of the Central Board of Directors of the Reserve Bank of India chaired by the RBI governor. The Financial Supervision functions are carried out by the Reserve Bank of India under the guidance of the Board for Financial Supervision (BFS). Primary objective of BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies.
Board for Payment and Settlement System: Board for Payment and Settlement Systems was constituted by the Reserve Bank in 2005 as a Committee of its Central Board. The functions are to regulate and supervise the payment and settlement systems, Set standards for existing and future systems, Approve criteria for authorization of payment and settlement systems
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