The Reserve Bank of India (RBI) was established under the Reserve Bank of India Act of 1934. This act provided the legal framework for the establishment of the central bank in India and outlines its functions, powers, and responsibilities.
The RBI was established as the central bank of India with the primary objective of regulating the monetary and credit system of the country. The RBI Act of 1934 gave the central bank the power to control the supply of money, regulate the cost and availability of credit, and to act as a banker to the government. The act also gave the RBI the authority to supervise and regulate commercial banks in India and to act as a lender of last resort in times of financial stress.
In conclusion, the Reserve Bank of India Act of 1934 provided the legal opportunity for the establishment of the Reserve Bank of India and defined its powers, functions, and responsibilities as the central bank of India.
