Rbi final 3


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Rbi final 3

  1. 1. 09 th Aug, 2011 Financial Markets & Institutions
  2. 2. Flow of Presentation History of RBI Celebrating 75 years of RBI Management & Structure Functions of RBI What they do? Monetary Model Direct & Indirect Instruments of RBI RBI Publication RBI : At time of Crisis Conclusion
  3. 4. History of RBI
  4. 5. History of RBI
  5. 6. History of RBI
  6. 7. Management Structure
  7. 8. Management Structure Markets Monetary Policy Department Financial Markets Department Research Regulation and Supervision Services Markets Support Internal Debt Management Department Department of External Investments and Operations Department of Economic Analysis and Policy Department of Statistics and Information Management Department of Banking Operations and Development Department of Non-Banking Supervision Urban Banks Department Foreign Exchange Department Rural Planning and Credit Department Department of Government Bank Accounts Department of Currency Management Department of Payment and Settlement System Customer Service Department Premises Department Secretary’s Department Rajbhasha Department Inspection Department Legal Department Department of Administration and Personnel Management Human Resources Development Department Department of Communication Department of Information Technology Department of Expenditure and Budgetary Control
  8. 9. <ul><li>To maintain monetary stability </li></ul><ul><li>To maintain financial stability and ensure sound financial institution. </li></ul><ul><li>To maintain stable payments system. </li></ul><ul><li>To promote the development of financial infrastructure of markets and systems. </li></ul><ul><li>To enable it to operate efficiently. </li></ul><ul><li>To ensure that credit allocation by the financial system </li></ul>Functions of RBI
  9. 10. What they do? <ul><li>The Reserve Bank is the umbrella network for numerous activities, </li></ul><ul><li>all related to the nation’s financial sector, encompassing and </li></ul><ul><li>extending beyond the functions of a typical central bank. </li></ul><ul><li>Monetary Authority </li></ul><ul><li>Issuer of Currency </li></ul><ul><li>Banker and Debt Manager to Government </li></ul><ul><li>Banker to Banks </li></ul><ul><li>Regulator of the Banking System </li></ul><ul><li>Manager of Foreign Exchange </li></ul><ul><li>Regulator and Supervisor of the Payment </li></ul><ul><li>and Settlement Systems </li></ul><ul><li>Developmental Role </li></ul>This list provides an overview of their primary activities:
  10. 11. Monetary Policy The Monetary Policy is the Process by which the monetary authority of a country controls the supply of money by targeting a rate of interest for the purpose of promoting economic growth & stability. Monetary Policy Model
  11. 12. Monetary Policy Model – Inflation Level
  12. 13. Monetary Policy Model - Currency
  13. 14. Monetary Policy Model – Price Level
  14. 15. Monetary Policy Model
  15. 16. Monetary Model – Money Supply
  16. 17. Monetary Model – Income Level
  17. 18. Monetary Model – Interest Rates
  18. 19. Objective of Monetary Policy <ul><li>The main objectives of monetary policy in India are: </li></ul><ul><li>Maintaining price stability </li></ul><ul><li>Ensuring adequate flow of credit to the productive sectors of the economy to support economic growth </li></ul><ul><li>Financial stability </li></ul><ul><li>Note : The relative emphasis among the objectives varies from time to time, depending on evolving macroeconomic developments. </li></ul>
  19. 20. Instrument of Monetary Policy The Reserve Bank’s Monetary Policy Department (MPD) formulates monetary policy. There are several direct and indirect instruments that are used in the formulation and implementation of monetary policy. <ul><li>Direct Instruments </li></ul><ul><li>Cash Reserve Ratio (CRR) </li></ul><ul><li>Statutory Liquidity Ratio(SLR) </li></ul><ul><li>Refinance Facilities </li></ul><ul><li>Indirect Instruments </li></ul><ul><li>Liquidity Adjustment Facility (LAF) </li></ul><ul><li>Open Market Operations (OMO) </li></ul><ul><li>Market Stabilisation Scheme (MSS) </li></ul><ul><li>Repo/reverse repo rate </li></ul><ul><li>Bank rate </li></ul>
  20. 21. Instrument of Monetary Policy Repo rate CRR SLR Bank Rate Reverse Repo Rate OMO LAF Reverse Repo Rate
  21. 22. <ul><li>The Reserve Bank is the nation’s sole note issuing authority. Along with the Government of India, RBI is responsible for the design and production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes. </li></ul><ul><li>In consultation with the government, they routinely address security issues and target ways to enhance security features to reduce the risk of counterfeiting or forgery. </li></ul><ul><li>RBI does 2 main things:- </li></ul><ul><ul><li>Currency Management </li></ul></ul><ul><ul><li>Currency Distribution </li></ul></ul>Issuer of Currency
  22. 23. Bankers to Bank <ul><li>All banks operating in the country have accounts with the Reserve Bank, just as individuals and businesses have accounts with their banks. </li></ul><ul><li>Like individual consumers, businesses and organizations of all kinds, banks need their own mechanism to transfer funds and settle inter-bank transactions—such as borrowing from and lending to other banks—and customer transactions. As the banker to banks, the Reserve Bank fulfills </li></ul><ul><li>this role. </li></ul><ul><li>‘ Banker to Banks’ function of the Reserve Bank, which is delivered through the “Deposit Accounts Department” (DAD) </li></ul><ul><li>Its also provides short term loans to selected banks. </li></ul>
  23. 24. Regulator of Banking System <ul><li>The Reserve Bank has a critical role to play in ensuring the system’s safety and soundness. </li></ul><ul><li>India’s financial system includes commercial banks, regional rural banks, local area banks, cooperative banks, financial institutions and non-banking financial companies. </li></ul><ul><li>There are various departments in the Reserve Bank that perform these regulatory and supervisory functions like:- </li></ul><ul><li>Department of Banking Operations and Development (DBOD) </li></ul><ul><li>Department of Non-Banking Supervision (DNBS) </li></ul><ul><li>Urban Banks Department (UBD) </li></ul><ul><li>Rural Planning and Credit Department (RPCD) </li></ul><ul><li>RBI take care of various aspect like licences, capital adequacy, risk management etc </li></ul>
  24. 25. <ul><li>The Reserve Bank ,has the responsibility of managing country’s foreign exchange reserves. </li></ul><ul><li>The basic parameters of the Reserve Bank’s policies for foreign exchange reserves management are safety, liquidity and returns. </li></ul><ul><li>The Reserve Bank mainly focuses on:- </li></ul><ul><ul><li>Maintaining market’s confidence in monetary and exchange rate policies. </li></ul></ul><ul><ul><li>stabilise foreign exchange markets. </li></ul></ul><ul><ul><li>Limiting external vulnerability by maintaining foreign currency liquidity etc. </li></ul></ul><ul><li>RBI also look after : </li></ul><ul><ul><ul><li>Foreign Investment </li></ul></ul></ul><ul><ul><ul><li>Indian Investment Abroad </li></ul></ul></ul><ul><ul><ul><li>External Commercial Borrowings </li></ul></ul></ul>Manager of Foreign Exchange
  25. 26. Development Role <ul><li>The Reserve Bank’s developmental role includes:- </li></ul><ul><ul><li>credit to productive sectors of the economy. </li></ul></ul><ul><ul><li>creating institutions to build financial infrastructure. </li></ul></ul><ul><ul><li>Expanding access to affordable financial services </li></ul></ul><ul><li>RBI has taken various initiatives for this purpose:- </li></ul><ul><ul><li>Kisan Credit Cards </li></ul></ul><ul><ul><li>Natural Calamities – Relief Measures </li></ul></ul><ul><ul><li>Micro, Small and Medium Enterprises Development. </li></ul></ul>
  26. 27. RBI Publications <ul><li>Annual </li></ul><ul><li>Quarterly </li></ul><ul><li>Monthly </li></ul><ul><li>Weekly </li></ul><ul><li>A Central Resource: The RBI’s Data Warehouse </li></ul><ul><li>Enterprise-wide data warehouse </li></ul><ul><li>User-friendly, public access via RBI web site, www.dbie.rbi.org.in </li></ul><ul><li>Pre-formatted reports </li></ul><ul><li>Simple and advanced queries </li></ul><ul><li>Definitions of basic concepts </li></ul>
  27. 28. RBI : Action at the time of Crisis <ul><li>The Reserve Bank’s willingness to use conventional and unconventional measures help buffer the nation from severe crisis. Here are some examples of our responses during the 2008-9 Global financial crisis: </li></ul><ul><li>Carefully considered and calibrated reduction of interest rates until situation has stabilized. </li></ul><ul><li>Loosened restrictions on access to foreign currency. </li></ul><ul><li>Creation of a rupee-dollar swap facility to manage short-term funding requirements. </li></ul><ul><li>Establishment of a refinancing window and special-purpose vehicle for non-banking financial companies. </li></ul><ul><li>Expansion of funding sources for umbrella financial institutions to keep credit flowing to small. </li></ul>
  28. 29. How They can Help You? <ul><li>Customer Service Department (CSD) </li></ul><ul><li>Banking Codes and Standards Board of India </li></ul><ul><li>Banking Ombudsman </li></ul>
  29. 30. <ul><li>Building on the firm foundation of India’s rich tradition, the Reserve Bank is also changing with the times. </li></ul><ul><li>The Reserve Bank’s mandate—yesterday, today and tomorrow—is to set a monetary and financial course that will sustain the nation’s economic growth and health during global downturns, periods of volatility and global upturns alike. </li></ul><ul><li>The Reserve Bank responses during extraordinary times are aimed at maintaining stability while ensuring sufficient rupee and foreign exchange liquidity to ensure that credit will continue to flow to businesses and consumers alike. </li></ul><ul><li>We also continue to address the challenge of ensuring that the national financial and monetary policy-making contribute to positive, sustainable impact for all citizens of India, across the income spectrum. </li></ul>Conclusion