Reserve Bank of India


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Reserve Bank of India

  3. 3. INTRODUCTION• Also known as the Central Bank.• The Reserve Bank of India Act, 1934 wascommenced on April 1, 1935 during theBritish Raj in accordance with the provisionsof the Reserve Bank of India Act, 1934.• RBI was established in April 1935 with ashare capital of Rs. 5 crores on the basis ofthe recommendations of the Hilton YoungCommission.• Reserve Bank of India was nationalized in theyear 1949.
  4. 4. • The RBI plays an important part inthe developmental strategy of theGovernment of India.• It is a member bank of the AsianClearing Union.• The general superintendence anddirection of the RBI is entrusted withthe 21member ed strong CentralBoard of Directors.
  5. 5. • The Governor (currently Duvvuri Subbarao), fourDeputy Governors, two Finance Ministryrepresentatives, ten Government-nominatedDirectors represent important elements from Indiaseconomy.• Four Directors to represent Local Boardsheadquartered at Mumbai, Kolkata, Chennai andNew Delhi.• Each of these Local Boards consist of five
  6. 6. • RBI maintains the economic structure ofthe country so that it can achieve the dualobjectives of price stability & economicdevelopment, because both objectives arediverse in themselves.
  7. 7. The bank was constituted forthe need of the following:
  8. 8. ROLES & FUNCTIONSOF RESERVE BANK OFINDIABank of Issue•The Bank has the sole right to issuebank notes of all denominations.•The Reserve Bank has a separateIssue Department which is entrustedwith the issue of currency notes. Soiled and Mutilated banknotes.
  9. 9. Monetary authority•The Reserve Bank of India is theprime monetary authority of thecountry .•It formulates, implements andmonitors the monetary policy,maintains price stability as well asensures an adequate flow of creditto productive sectors.
  10. 10. Regulator and supervisor of thefinancial system• The institution serves as the regulator andsupervisor of the financial system andprescribes broad parameters of bankingoperations within which the countrysbanking and financial system functions.• It`s objectives are to maintain publicconfidence in the system, protectdepositors interest and provide cost-effective banking services to the public.
  11. 11. Manager of foreignexchange• Objective: to facilitate external tradeand payment and promote orderlydevelopment and maintenance offoreign exchange market in India.• RBI buys & sells foreign currency tomaintain the exchange rate.
  12. 12. Banker of banks• RBI also works as a central bankwhere commercial banks are accountholders and can deposit money.• RBI maintains banking accounts ofall scheduled banks.
  13. 13. Detection Of Fakecurrency• In order to curb the fakecurrency menace, RBI haslaunched a website to raiseawareness among masses aboutfake notes in the market.• .inprovides information aboutidentifying fake currency.
  14. 14. Developmental role• The central bank has to perform a widerange of promotional functions to supportnational objectives and industries.• To develop the quality of Bankingsystem.• Establish institutions like NABARD,Staff Training Colleges etc.• Promotional functions to supportdevelopment of Banking Relatedactivities.
  15. 15. Related functions• The RBI is also a banker to thegovernment and performs merchant bankingfunction for the central and the stategovernments. It also acts as their banker.• The National Housing Bank (NHB) wasestablished in 1988 to promote private realestate acquisition. The institutionmaintains banking accounts of allscheduled banks, too.
  16. 16. Regulates the opening/installation ofATMsFresh currency for ATM s`s supplied byRBIIssues licenses to banksRegulates the trade of Gold•Collection & publication of data•Issues guidelines and instructions forcommercial banks
  17. 17. Role in Economicdevelopment• Development of Banking System• Development of FinancialInstitutions• Development of Backward areas• Economic of stability• Economic growth17
  18. 18. Current Rates:Policy rates:Bank Rate : 8.75%Repo Rate : 7.75%Reverse Repo Rate : 6.75%Marginal Standing Facility Rate :8.75%
  19. 19. Reserve ratios• CRR : 4%• SLR : 23.0%Exchange ratesRBI Reference Rate• INR / 1 USD : 54.4815• INR / 1 Euro : 71.2736• INR / 100 Jap. YEN : 58.9100• INR / 1 Pound Sterling : 82.7193
  20. 20. Lending or depositrates:Base Rate : 9.70% - 10.50%Savings Deposit Rate :4.00%Term Deposit Rate : 7.50% -9.00%
  21. 21. Subordinates of RBI• NHB• NABARD• Depositor`s Insurance coverageCorporation of India• Bharatiya Reserve Bank Note MudranPrivate Limited
  22. 22. TRAININGESTABLISHMENTS• Has five training establishments• Two, namely, College of AgriculturalBanking and Reserve Bank of India StaffCollege• Others are autonomous, such as, NationalInstitute for Bank Management, IndiraGandhi Institute for DevelopmentResearch (IGIDR), Institute forDevelopment and Research in BankingTechnology (IDRBT)
  23. 23. Latest news fromRBI…………..• Reserve Bank of India GovernorDuvvuri Subbarao expressedconcern that high inflation wasforcing people to indulge in buyinggold rather than depositing fundswith banks.The government has announcedseveral measures to discouragepeople from buying gold andprodding them to invest in financial
  24. 24. The Reserve Bank of Indiagovernor, DuvvuriSubbarao, may obligeFinance Minister P.Chidambaram with aninterest rate cut on March19 impressed by the tightfiscal ship that is being run,but the markets may defylower rates for a longer