CHAPTER 13
Relation between Union Government and the Reserve Bank of India
In every country, there is one organization that works as the central bank. The function of the central bank of a country is to control and monitor the banking and financial system of the country. The Reserve Bank of India (RBI) is the central bank of the Indian financial system. The enactment of the Reserve Bank of India Act, 1934 paved the way for setting up the system. The RBI was established on April 1, 1935. In the earlier years, it did not have adequate powers of control or regulation. This Act gave the RBI powers to regulate issue of banknotes, the custody of the commercial banks’ cash reserves, and the discretion of granting them accommodation. Some promotional ...
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