The Reserve Bank of India was established in the year

The correct answer is Option 1 (1935).

Key Points

• 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.
• Initially, the RBI was set up as a private entity, but was nationalized in 1949, making it wholly owned by the Government of India.
• The headquarters of the Reserve Bank of India was originally located in Kolkata, but it was later shifted to Mumbai in 1937.
• The RBI is India's central banking institution, responsible for regulating the monetary policy, issuing currency, and ensuring financial stability.
• The first Governor of the Reserve Bank of India was Sir Osborne Smith, and the first Indian Governor was C.D. Deshmukh.

Additional Information

• Reserve Bank of India Act, 1934:
  • This act laid the foundation for the establishment of the RBI and outlined its functions and powers.
  • It governs the operations and regulatory framework of the RBI.
• Nationalization of RBI (1949):
  • The RBI was nationalized on January 1, 1949, making it a state-owned institution.
  • This move was intended to align monetary policy with the economic priorities of the Indian government.
• Core Functions of RBI:
  • Issuance of currency and management of reserves.
  • Regulation of banks and non-banking financial companies (NBFCs).
  • Formulation and implementation of monetary policy to control inflation and stabilize the economy.
• Role in Indian Economy:
  • The RBI plays a crucial role in ensuring financial stability, promoting economic growth, and maintaining a stable currency value.
  • It acts as the lender of last resort for banks in times of financial distress.