The first bank of India was named as “Bank of Hindustaan” (European management Calcutta) was established in 1770 and ended in 1829 to 1832.
The second bank was established as General bank in year 1786 and ended 1791.
The largest and oldest bank of India is State bank of India and is in still existence. Earlier it was named as Bank of Calcutta in year 1806.
RESERVE BANK OF INDIA
RBI was established in 1st April in year 1935. Established under RBI act 1934, on recommendation oh ‘Hilton young commission’. Nationalized in 1949. In year 1949 SBI was given controlled of 8 state associated banks under the SBI (subsidiary bank act 1959). In year 1969 nationalism of 14 Indian schedule banks was done. In year 1980 nationalism of 6 banks was done.
HISTORY OF RBI ACT 1934
• RBI was private owned bank in start (no share of government)
• Hilton young commission or the royal commission or Indian currency and finance in 1926 gave recommendation of central bank.
• Establishment of RBI was on 1th April 1935.
• First office was established in Calcutta.
• After Calcutta in Bombay in the year 1937
Back then the paid up capital of RBI bank was 5 crore.
• After that government realized of need of national bank
• RBI nationalized in 1949
• First governor of RBI was Sir Obome smith (1935-1937)
• First Indian governor of RBI was Sir V Deshmukh (1943_1949)
STRUCTURE OF RBI
• RBI governed by central directors (changed in every 4 years)
• Official directors – Governor + 4 deputy director
• Number of official directors – 10 Directors + 2 Governors official +4 other officers.
FUNCTIONS OF RBI
• Issuing of currency, demolishing or forefeet or re issue.
• Development role- Its chief institution it develops the banks and country for rotation and for savings on interest and increasing of GDP.
• Banker to govt- Government’s assets expenses and loans are from RBI
• Banker to bank- Bank needs loan or intrest in saving .
• Monetary and fiscal policy fixing rate taxes rate government expenditure
• Foreign reserves purchase and sale exchange of currencies.
• Advisory role to the government and
banks for investments.
To regulate the issue of bank notes and keeping of reserves with a view of securing monetary stability in India and generally to operate the currency and credit system of country to its advantage.
CREDIT CONTROL MEASURES
There are two types of credit control measures:
1. Quantative measure
A) Bank rate
2. Qualitative measure
a) rationing of credit
b) margin and requirements
d) direct action
Those methods are who ultimately control volume of credit
1) Bank rate: RBI grants loan of intrest rate is known as bank rate.
2) Cash reserve ratio: Every bank should leave their amount of cash to RBI. RBI can change the CRR rate time to time. Between 3% to 15%. Volume of credit decreses.
3) Statutory liquidity ratio: every bank have to hold certain amount of gold/cash.
SLR: Decided by RBI.
1) Rationing of credit: When RBI limits certain amount that bank can’t give loan more than that amount.
2) Margin requirements: RBI give margin requirements like on 1crore 50 lakh loan can given.
3) Publicity: When RBI issues advertisement relating information of controlling inflation.
4) Direct action: RBI finds the reason of inflation ad takes direct action.