CENTRAL BANK

Historical Development of Banks:

• The Ricks Banks of Sweden, which had sprung from a private bank established in 1656 is the oldest central bank in the world. It acquired the sole right of note issue in 1897.
• The central bank of England called Bank of England was established in 1694. It is known as ‘THE MOTHER OF ALL CENTRAL BANKS’
• The fundamentals of the art of banking have been developed by the Bank of England as the first bank of issues in 1864.
• The central bank of France called ‘Bank of France’ was founded in
• The USA established a central banking system in the form of Federal Reserve Banks in 1914.
• A large number of central banks were established between 1921 and 1954 in compliance with the resolution passed by the International Finance Conference held at Brussels in 1920.
  • The South African Reserve Bank (1921).
  • The Central Bank of China (1928)
  • The Reserve Bank of New Zealand (1934)
  • The Reserve Bank of India (1935)
  • The Central Bank of Ceylon (1950) and
  • The Bank of Israel (1954) was established.

Functions of Central Bank:

• The objective is to maintain the currency and credit system of the country.
• It is the sole authority to issue currency.

Banker’s Bank:

• RBI is the bank of all banks in India as it provides loans to banks, accepts the deposit of banks and rediscounts the bills of banks.
• It acts as a custodian of FOREX.
• It administers and enforces the provision of Foreign Exchange Management Act (FEMA), 1999.
• The payment and Settlement systems Act of 2007 (PSS Act) gives RBI oversight authority for the payment and settlement systems in the country.
• RBI introduced the Banking Ombudsman Scheme in 1995.