reserve benk of india


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reserve benk of india

  1. 1. RBI<br />By<br />Soumik Mukherjee<br />PGDM,Sem-2<br />Reg No- 4018<br />
  2. 2. Preamble<br />The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as:<br />“ regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.”<br />
  3. 3. Background<br /><ul><li>Established under RBI Account of 1934
  4. 4. Started functioning from April 1, 1935
  5. 5. It was nationalized in January , 1, 1949
  6. 6. Share capital Rs.5.00 Cr of Rs.100.00 each
  7. 7. Government held nominal shares of Rs.2.22 lac
  8. 8. At the time of Nationalization Govt. paid Rs.118.58ps per share of Rs.10.00 </li></li></ul><li>objectives<br />The Objective of any Central Bank is- <br /><ul><li>to stabilize the monitory unit
  9. 9. It has monopoly of note issuing
  10. 10. It is not a profit center
  11. 11. It will not compete with the commercial banks
  12. 12. It is a Bank of Issue
  13. 13. It is a Banker to the government
  14. 14. Custodians of Nations Credit
  15. 15. Controller of Credit</li></li></ul><li>RBI SHARE CERTIFICATE<br />
  16. 16. Central Board<br />The Reserve Bank&apos;s affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. <br /><ul><li>Appointed/nominated for a period of four years
  17. 17. Constitution:
  18. 18. Official Directors
  19. 19. Full-time : Governor and not more than four Deputy Governors
  20. 20. Non-Official Directors
  21. 21. Nominated by Government: ten Directors from various fields and one government Official
  22. 22. Others: four Directors - one each from four local boards</li></ul>Functions : General superintendence and direction of the Bank&apos;s affairs<br />
  23. 23. CB CONTINUED…..<br />Dr. Y.V.Reddy – Governor<br />Dr. Rakesh Mohan – Deputy Governor<br />Shri. V.Leeladhar – Deputy Governor<br />Smt.Shyamala Gopinath – Deputy Governor<br />Smt. Usha Thorat – Deputy Governor<br />
  24. 24. Local Boards<br />One each for the four regions of the country in Mumbai, Calcutta, Chennai and New Delhi<br />Membership:<br />consist of five members each<br />appointed by the Central Government<br />for a term of four years<br />Functions :To advise the Central Board on local matters and to represent territorial and economic interests of local cooperative and indigenous banks; to perform such other functions as delegated by Central Board from time to time. <br />
  25. 25. Powers and <br />responsibilities<br />of RBI in respect of regulation of banks<br />The Reserve Bank of India has been entrusted with the responsibility under the Banking Regulation Act, 1949 to regulate and supervise banks&apos; activities in India and their branches abroad. While the regulatory provisions of this Act prescribe the policy framework to be followed by banks, the supervisory framework provides the mechanism to ensure banks&apos; compliance with the policy prescription. <br />
  26. 26. Banking Supervision<br /><ul><li>Organisation of the Supervision Function
  27. 27. Supervision of overseas branches of Indian banks
  28. 28. Uniform guidelines on Write-off/ compromise settlements
  29. 29. Checklist for Inspecting Officers
  30. 30. Study of large value bank frauds
  31. 31. Nostro Accounts- Reconciliation
  32. 32. Non- SLR Investments
  33. 33. Transparency and Disclosure
  34. 34. Internal controls and housekeeping in banks</li></li></ul><li>Note Issuing<br />The assets of the Issue Department against which bank notes are issued are….<br /><ul><li>Gold coins and Bullions
  35. 35. Foreign Securities
  36. 36. Rupee Coins
  37. 37. Government of India Rupee Securities
  38. 38. The Bills of Exchange and Promissory notes payable in India, which are eligible for purchase by the bank under Sec22 of RBI act
  39. 39. Minimum Reserve System since 1957</li></ul>Rs.200 Crore of which Rs.115 crore in gold<br />
  40. 40. RBI Monetary Policy<br /><ul><li>Monitory Policy refers to the policy of the central bank to control money supply, credit and inflation in economy
  41. 41. Monetary policy is a part of overall economic policy
  42. 42. To accelerate economic development to raise national income and standard of living
  43. 43. to control inflationary pressures in the economy</li></li></ul><li>RBI’s Credit Control<br />Measures<br /><ul><li>RBI has various tools to use to maintain monetary stability--
  44. 44. Quantitative Controls – to regulate the volume of total credit
  45. 45. Qualitative(Selective Credit) Controls– to regulate the flow of credit to various uses and purposes </li></li></ul><li>Controls<br /><ul><li>Quantitative-
  46. 46. Bank Rate - 6% (with effectfrom30th April, 2003 )
  47. 47. Open Market Operations – Buying and Selling of Securities
  48. 48. CRR-25.0%
  49. 49. SLR-7.5%
  50. 50. REPO – 9% (at present)
  51. 51. Rev REPO - 6% (at present)
  52. 52. Qualitative-
  53. 53. Selective Credit Control</li></li></ul><li>WHAT’S THAT<br />CRR<br />Also called the cash reserve ratio, refers to a portion of deposits (as cash) which banks have to keep/maintain with the RBI.<br />Bank Rate<br />This is the rate at which RBI lends money to other banks (or financial institutions) <br />SLR<br />Besides the CRR, banks are required to invest a portion of their deposits in government securities as a part of their statutory liquidity ratio (SLR) requirements. <br />Reverse Repo Rate<br />This is the exact <br />opposite of repo rate. <br />Repo (Repurchase) Rate<br />Repo rate is the rate at which banks borrow funds from the RBI to meet<br /> the gap between the demand they <br />are facing for money (loans) and how much they have on hand to lend. <br />