Facts for Prelims (FFP)
Source: PIB
Context: The Prime Minister addressed the opening ceremony of RBI@90 in Mumbai, marking 90 years of the Reserve Bank of India (RBI).
Brief History of RBI:
- Royal Commission on Indian Currency, 1926 (Hilton Young Commission) recommended the establishment of the RBI, a suggestion reiterated by the Indian Central Banking Enquiry Committee in 1931.
- The RBI was founded in 1935 under the Reserve Bank of India Act, 1934, with Sir Osborne Smith serving as its inaugural Governor.
- In 1949, the RBI was nationalized, marking a pivotal moment in its institutional history.
The Reserve Bank of India (RBI) has evolved significantly in recent years:
- Inflation-targeting central bank
- Foreign exchange reserves
- Macroeconomic stability
- Reduction in NPAs
- Technology in payments
- Central bank digital currency
However, the RBI faces several challenges:
- Banking Regulation and Supervision
- Transparency with Regulated Entities
- Regulating New-Age Fintech Firms
- Limited Powers over Public-Sector Banks
- Potential Fiscal Dominance of Monetary Policy
