Role of RBI in Indian Banking System

1. Centre Name
VASAI BRANCH OF WIRC OF
ICAI
Batch Timing
2:30 pm to 8:30 pm
Batch Commencement Date
11/07/2022
Role Of
In the Indian Banking System

2. Reason for selecting topic
● The Indian banking system is one of the largest and most extensively accessed
sectors in the country.
● Apart from serving as the backbone of the economy, the system is also
responsible for ensuring transparency in the monetary transactions and
implementation of various financial reforms.
● The banking system is governed by an apex body called the Reserve Bank of
India which is responsible for governing, managing and monitoring the
functioning of the Indian banking system.
● The RBI plays such an important role in the country's functioning, which is why
we chose this topic for our presentation so as to learn about this entity and its
impact.
● In this presentation we will get to know more about RBI

3. Index
1 Reason
2 Index
3 Introduction
4 History
5 Organisational structure
6 Structure of banking
7 Role of RBI HEADER
8 Monetary Authority
9 Issuer Of Currency
10 Issuer of baking license
11
Regulator and supervisor of
Payments and settlements systems
12 Bankers bank
13 Lender of Last Resort
14 Banker and Debt Manager og Govt.
15 Controller of credit
16 Digitisation And Modernisation
17 Current Affairs
18 Bibliography

4. Introduction
● The Reserve Bank of India is India's central bank and
regulatory body responsible for regulation of the Indian
banking system.
● The headquarters of Reserve Bank of India is located in
Mumbai.
● It has 19 regional offices & 10 sub-offices.
● The preamble to the RBI Act, 19342 describes its main
functions as-
● "...to 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."
RBI governor Shaktikanta Das.
Index

5. History
● The Reserve Bank of India was set up
on the basis of the recommendations
of the Hilton Young Commission.
● Established in 1st April 1935 during
the British Rule, in accordance with
the provisions of the Reserve Bank of
India Act 1934.
● The original share capital was Rupees Five
Crores divided into shares of 100 each fully
paid.
● Initially it was privately owned but later on in
1949, the bank was nationalised and is fully
owned by the Govt. of India.
● RBI was initially established in Kolkata but was
permanently moved to Mumbai in 1937. Index

6. ● The Central Board of Directors is the
main committee of the RBI.
● The Government of India appoints the
directors for a 4-year term.
● The Board consists of a Governor, and
not more than 4 Deputy Governors.
● 4 Directors to represent the regional
boards, 2 from the Ministry of Finance
and 10 other directors from various
fields.
● The bank is headed by the Governor and
the post is currently held by Shaktikanta
Das.
● There are 4 Deputy Governors. Shri. T.
Rabi Sankar, Shri. M. Rajeshwar Rao,
Dr. M.D. Patra, and Shri. M.K. Jain.
Organizational Structure
Governor
Deputy Governor
Executive Directors
Principal Chief Governor Manager
Chief General Manager
General Managers
Deputy General Managers
Asstt. General Manager
Managers
Asst Managers
Support staff
S
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t
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r
e
Index

7. Structure of banking
Index
Reserve Bank
Of India
Scheduled
Banks
Commercial
Bank
Public Sector
Bank
Private Sector
Bank
Foreign
Bank
Regional Rural
Bank
Co-prative
Bank
Unscheduled
Banks

8. Role of RBI in Indian Banking system
Issuer of
currency
Banker’s
Bank
Supervisor
of Financial
System
Foreign
Exchange
Manager
Banker to
Govt
Monetary
Policy
Index

9. Monetary Authority
● The main role of RBI is to control monetary policy.
● The monetary policy can be Expansionary or Contractionary.
Monetary
Policy
Expansionary
An expansionary monetary policy is focused on expanding
the money supply in an economy. An expansionary
monetary policy is implemented by lowering key interest
rates thus increasing market liquidity.
Contractionary
A Contractionary monetary policy is focused on contracting the
money supply in an economy. A Contractionary monetary policy
is implemented by increasing key interest rates thus reducing
market liquidity.
Index

10. The tools used for implementation
of the objectives of monetary
policy are:
● Reserve ratio: Banks are
required to keep aside a set
percentage of cash reserves or
RBI approved assets.
● Cash reserve ratio: Banks are
required to set aside this
portion in cash with the RBI.
● Statutory liquidity ratio: Banks are required to set aside this portion in
liquid assets such as gold or RBI approved securities such as
government securities.
Index

11. Issuer Of Currency
 The reserve bank is the nation’s sole note issuing authority.
 The reserve bank also makes sure there is an adequate supply of coins, produced by
government and also destroys currency and coins not fit for circulation.
 The objectives are to issue bank notes and
giving public adequate supply of the same, to
maintain the currency and credit system of the
country to utilize it in its best advantage, and
to maintain the reserves.
 Although the RBI has the power to print Indian
currency, the government still has the final
say on a majority of the reserve bank’s
actions.
Index

12. Issue Of Banking License
 A banking license certifies that a bank has
met all the legal requirement when it
comes to protecting its customers’ money
and data.
 The reserve bank of India is empowered
to grant license to commence banking
business in India, including the power to
cancel a license granted to a banking
company.
 Any bank that has to obtain the license
for various banking activities has to
obtain the license from the RBI.
 A banking license means that a
financial company meets a set of strict
government regulations.
Banking licenses allow services such as
Managing deposits in personal and business
accounts
Issuing debit and credit cards
Processing foreign exchange services.
Index

13. Regulator and supervisor of payments systems
 Payment and settlement system means the
financial infrastructure that carries out payment
and settlement between banks and other
institutions.
 The payment and settlement system comprise of
several arrangements like real time gross
settlement, national electronic fund transfer etc.
And is designed and managed by the RBI
Various payment systems
Debit card
Credit card
Electronic funds transfer
Internet banking
 Central banks including the RBI are also
having clearing houses.
 A payment system provides the channels
through which funds are transferred among
banks and other institutions to discharge
payment obligations.
Index

14. Bankers bank As the banker to banks, RBI focus on:
 Enabling
• smooth,
• swift and seamless
• clearing and settlement of
inter-bank obligations.
 Providing an efficient means of
funds transfer for banks.
 Enabling banks to maintain their accounts with us for purpose of statutory
reserve requirements and maintain transaction balances.
Index

15. Lender of Last Resort
Index

16. Banker and Debt Manager of govt.
● The Reserve Bank may also, by
agreement, act as the banker and the
debt manager to the state
Governments.
● Manage their public debt, float new
loans, issue and retirement of rupee
loans, interest payment of the loan and
operational matters about debt
certificates and their registration.
● RBI’s Policies aims at minimizing the cost of borrowing, improving depth and
liquidity of Government securities markets by developing an active secondary
market.
Index

17. Controller Of credit
● Credit control is a tool used by Reserve Bank of India, a major
weapon of the monetary policy used to control the demand and
supply of money i.e. liquidity in the economy.
● Central Bank i.e. RBI regulates the credit that the commercial
banks grant.
Qualitative method Quantitative method
Marginal requirement
Rationing of credit
Publicity
Direct Action
Moral Suasion
Bank rate
*Chart showing
effect of increase in
bank rate
Index

18. Digitisation And Modernisation
26 March 2012
Digitisation Agenda
No. of bank accounts
Inclusion of Common Merchants
Convenience
Scope of digital payments
● All merchant discount rate (MDR) charges were
eliminated for RuPay transactions from 1 January
2020.
● RuPay surpassed Visa as the largest payment
card network in India by number of transactions in
June 2017, recording 375 million (37.5 Crores)
transactions.
Index

19.  RBI in 2012 released a vision statement
for a period of four years that indicated
commitment towards building a safe,
efficient, accessible, inclusive,
interoperable and authorized payment and
settlement system in India.
India
Bhutan
Nepal
Malaysia
304
banks
Monthly volume of
4.52 billion
transactions
Monthly Value of ₹8.26 lakh
crore.
Mobile-only ₹34.95 lakh crore
11 April 2016
 It is part of the Green Initiative.
 Under RBI guidance, NPCI became
the primary body with the task to
develop a new payment system that
is simple, secure, and interoperable.
Singapore
United Arab Emirates
France
Digitisation And Modernisation
Index

20.  Ease of Payment
 Increase in Transactions
 Accessible credit
Current Affairs 8 June 2022, RBI allowed linking RuPay
Credit Card with Unified Payments Interface
(UPI).
0 MDR charges
Index

21. Current Affairs
On 20 June, 2022 the RBI disallowed
Non-bank prepaid Instruments from
loading credit lines into these platforms
.
 Financial inclusion of lower spending
group
 Digitisation
People start purchasing things they don't need
with the money they don't have.
Index

22. Bibliography
 Wikipedia
 RBI Official website
 Think School (youtube.com)
 The Indian Express (News outlet)
 Business Standard (News outlet)
 www.slideshare.net
 Google Search, etc. Index

23. Index

24. Index