The Reserve Bank of India
India's central bank: it issues currency, sets interest rates, supervises banks and is banker to the government.
What the paper can ask
- Established 1 April 1935; the Central Office was first set up in Kolkata and moved permanently in 1937.
- Functions: monetary authority, regulator and supervisor of the financial system, issuer of currency, banker to government, banker to banks, manager of foreign exchange.
- In May 2026 the board approved a record surplus transfer of Rs 2,86,588 crore to the government for 2025-26. (as of 23 Oct 2026)
Why exams ask
The founding Act, the Hilton Young Commission, nationalisation year and the current policy rates are the usual questions.
The full story
The Reserve Bank of India (RBI) is the country's central bank. It began operating on 1 April 1935, was later nationalised and is wholly government owned. It is the monetary authority (setting the policy rate through its Monetary Policy Committee), the issuer of currency notes, the regulator of banks, banker to governments and banks, and manager of foreign exchange. The Governor heads it.
Test yourself
1.The Reserve Bank of India began operations on 1 April 1935 and was nationalised in:
Correct. Set up as a shareholders' bank on the Hilton Young Commission's recommendation, the RBI was nationalised on 1 January 1949.
Not quite. Set up as a shareholders' bank on the Hilton Young Commission's recommendation, the RBI was nationalised on 1 January 1949. It goes into your error book.
2.Who was the first Indian Governor of the Reserve Bank of India?
Correct. Sir Osborne Smith was the first Governor (1935); Sir C. D. Deshmukh, appointed in August 1943, was the first Indian Governor and later Union Finance Minister.
Not quite. Sir Osborne Smith was the first Governor (1935); Sir C. D. Deshmukh, appointed in August 1943, was the first Indian Governor and later Union Finance Minister. It goes into your error book.
3.Where is the headquarters of the Reserve Bank of India?
Correct. The RBI's central office was first in Calcutta and moved permanently to Bombay (Mumbai) in 1937.
Not quite. The RBI's central office was first in Calcutta and moved permanently to Bombay (Mumbai) in 1937. It goes into your error book.