Reserve Bank of India-B.V.Raghunandan

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formation, management and functions of Reserve Bank of India

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Reserve Bank of India-B.V.Raghunandan

  1. 1. Reserve Bank of India Introduction, Formation, & Management
  2. 2. Traditional Functions <ul><li>Issue of Bank Notes </li></ul><ul><li>Banker to the Government </li></ul><ul><li>Bankers' Bank </li></ul><ul><li>Monetary Regulation </li></ul><ul><li>Custodian Foreign Exchange </li></ul>
  3. 3. Issue of Notes <ul><li>Minimum Reserve System </li></ul><ul><li>Issue Department has 14 offices </li></ul><ul><li>In addition, Currency Chest maintained by SBI, its Associates, or PS Banks </li></ul>
  4. 4. Banker to The Government <ul><li>Maintaining Accounts </li></ul><ul><li>Receiving the Revenue of the governments </li></ul><ul><li>Making Payments of the governments </li></ul><ul><li>Providing Remittance Facilities </li></ul><ul><li>Issuing Treasury Bills </li></ul><ul><li>Providing Ways & Means Finance </li></ul><ul><li>Advisor to the Government </li></ul><ul><li>Representing the Government </li></ul>
  5. 5. Bankers’ Bank <ul><li>Ensuring Liquidity of Banks </li></ul><ul><li>Clearing House & Remittance Facilities </li></ul><ul><li>Real Time Gross Settlement: Introduced in 2004, it is the beginning of a clearing system at the national level </li></ul><ul><li>Lender of Last Resort </li></ul><ul><li>Negotiated Dealing System: Introduced in Aug 1, 2005 for SGL A/c holders, it is an anonymous order matching system for government securities </li></ul>
  6. 6. Power Over the Banks <ul><li>Licensing to carry on banking </li></ul><ul><li>Licensing for branch expansion </li></ul><ul><li>Approval of liquidity, capital adequacy and reserves </li></ul><ul><li>Inspection of banks </li></ul><ul><li>Appointment of chairmen with the approval </li></ul><ul><li>Mergers & Acquisitions of banks </li></ul><ul><li>Compulsory liquidation of banks </li></ul>
  7. 7. Monetary Regulation <ul><li>Quantitative Credit Control </li></ul><ul><li>-Bank Rate </li></ul><ul><li>-open market operation </li></ul><ul><li>-variable cash reserve ratio </li></ul><ul><li>Selective Credit Control </li></ul><ul><li>-rationing of credit </li></ul><ul><li>-margin requirement </li></ul><ul><li>-period allowed for repayment </li></ul><ul><li>-moral suasion </li></ul>
  8. 8. Custodian of Foreign Exchange Reserve <ul><li>Obligation to buy & sell currencies of members of IMF </li></ul><ul><li>Receiving export revenue and other receipts from foreign countries </li></ul><ul><li>Routing all payments outside </li></ul><ul><li>Determining exchange rates </li></ul><ul><li>Market intervention </li></ul>
  9. 9. Promotional Functions of RBI <ul><li>Publication of Data </li></ul><ul><li>Deposit Insurance Corporation </li></ul><ul><li>Unit Trust of India </li></ul><ul><li>Bill Market Schemes,1952 & 1971 </li></ul><ul><li>Banking Ombudsmen Scheme, 1995-15 cities </li></ul><ul><li>IDRBT in 1995 </li></ul><ul><li>Indian Financial Network (INFINET) in 1999 </li></ul><ul><li>National Financial Switch-ATM sharing by banks </li></ul>
  10. 10. Role of RBI in Agricultural Finance <ul><li>Establishment of Agricultural Credit Department in 1935 </li></ul><ul><li>Development of Co-operative Movement </li></ul><ul><li>Funding LDBs </li></ul><ul><li>Setting up ARDC in 1963 </li></ul><ul><li>Encouragement of RRBs </li></ul><ul><li>Establishing NABARD in 1982 </li></ul>
  11. 11. Role of RBI in Industrial Development <ul><li>Establishment of Term Lending Institutions </li></ul><ul><li>Credit Guarantee Schemes- Discontinued in 1981 </li></ul><ul><li>Credit Guarantee Corporation of India Limited in 1971- Taken over by Deposit Insurance Corporation in 1978 </li></ul><ul><li>Small Loans Guarantee Scheme in 1981 </li></ul>
  12. 12. THANK YOU

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