The Reserve Bank of India (RBI) is India’s central banking institution, which controls the monetary policy of the Indian rupee. It commenced its operations on 1 April 1935 during the British Rule in accordance with the provisions of the Reserve Bank of India Act, 1934. The original share capital was divided into shares of 100 each fully paid, which were initially owned entirely by private shareholders. Following India’s independence on 15 August 1947, the RBI was nationalized on 1 January 1949.
The Reserve Bank of India regulates the money market segment of securities market. As themanager of the government’s borrowing program, RBI is the issue manager for thegovernment. It controls and regulates the government securities market. RBI is also theregulator of the Indian banking system and ensures that banks follow prudential norms in theiroperations. RBI also conducts the monetary, forex and credit policies, and its actions in thesemarkets influences the supply of money and credit in the system, which in turn impact theinterest rates and borrowing costs of banks, government and other issuers of debt securities.