The Reserve Bank of India is the Central Bank of the country, entrusted with the responsibility of monetary stability, the management of currency and the supervision of financial as well as the payments system.
The Reserve Bank of India was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934.
CHRONOLOGICAL ORDER OF EVENTS
1926 Birth of institution
Hilton Young Commission recommends setting up of the reserve bank of india
The Reserve Bank of India is established on April 1, and starts functioning.
The Reserve Bank of India goes national, as India gains independence.
The Reserve Bank of India is nationalized.
RBI puts in a modern payment and settlement system, strives to further strengthen the financial sector.
Dream about the institution you work for, dream about changes you could make to the Indian economy and strive to turn your dreams into reality.
MONETARY AUTHORITY OF THE
Monetary policy formulation is the central function
Monetary policy is a framework which represents policies, objectives and instruments directed towards regulating money supply and the cost and availability of credit in the economy.
ISSUER OF CURRENCY
It issues notes in the following denominations: Rs.2, Rs.5, Rs.10, Rs.20, and Rs.50, Rs.100, Rs.500, Rs.1000.
It acts as the sole currency authority or the monopoly authority in issuing currency in the country
BANKER TO GOVERNMENT
The Reserve Bank acts as a banker not only to the central government but also to the state governments.
BANKER TO BANK
The Reserve Bank maintains the banking accounts of all commercial and scheduled banks.
It has powers to regulate credit of banking companies.
The Reserve bank can appoint any bank as its agent.
CONTROLLER OF CREDIT
RBI is expected to correct inflationary or deflationary situation whenever they arise and achieve reasonable economic stability in the country.
For economic stability, RBI has to control the credit created by commercial banks with a view to maximize their profits.
MONETORY POLICY OF RBI
Monetary policy is the one employed by the State through its Central Bank, to control the supply of money as an instrument of achieving the objectives of the general economic policy. Such a policy strives at minimizing the disadvantage of increasing money supply and to maximizing the benefits resulting from the existence and operations of the monetary system.
HIGHLIGHTS OF THE ANNUAL
POLICY OF THE RESERVE BANK
OF INDIA FOR THE YEAR 2006-07
Bank Rate, Reverse Repo Rate, Repo Rate and Cash Reserve Ratio kept unchanged.
GDP growth projection for 2006-07 at 7.5-8.0 per cent.
Inflation to be contained within 5.0-5.5 per cent during 2006-07.
M3 projected to expand by around 15.0 per cent for 2006-07.
Deposits projected to grow by around Rs.3,30,000 crore for 2006-07.
TOOLS OF FISCAL POLICY
Tools of Fiscal Policy
When the government is unable to meet its public expenditure through public revenue, its resort to public debt, public debt can be raised with in the country or out side the country.
It is the income of government through various sources like taxes, fees, profits of the state enterprise and grants.
It is the expenditure of the public authority on various socio-economic and political activities. Expenditure may be spending on administration of law and order development of industries etc.