2. Establishment:
The Reserve Bank of India was established on April
1, 1935 in accordance with the provisions of
the Reserve Bank of India Act, 1934.
The Central Office of the Reserve Bank was initially
established in Calcutta but was permanently moved
to Mumbai in 1937. The Central Office is where the
Governor sits and where policies are formulated.
Though originally privately owned, since
nationalization in 1949, the Reserve Bank is fully
owned by the Government of India.
3. Preamble:
The Preamble of the Reserve Bank of India describes
the basic functions of the Reserve Bank 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."
5. The Reserve Bank is wholly owned by the Government of India.
The Central Board of Directors is at the top of the Reserve Bank’s
Organization Structure. They are appointed by the Government of
India. They oversees the Reserve Bank’s business.
The Central Board of Directors include Official and
non official directors.
Central Board of Directors by the Numbers
Official Directors
1 Governor
4 Deputy Governors, at a maximum
Non-Official Directors
4 directors—nominated by the Central Government to represent
each local board
10 directors nominated by the Central Government with
expertise in various segments of the economy
6. Explanation:
The Governor is the Reserve Bank’s chief executive. The Governor supervises & directs the
affairs and business of the RBI. The management team also includes Deputy Governors and
Executive Directors.
The Central Government nominates fourteen Directors on the Central Board, including one
Director each from the four Local Boards. The other ten Directors represent different
sectors of the economy, such as, agriculture, industry, trade, and professions. All these
appointments are made for a period of four years. The Government also nominates one
Government official as a Director representing the Government which is usually the finance
secretary to the Government of India.
6 meetings were held at a minimum each year and one meeting at a
minimum each quarter.
Four Local Boards: RBI has 4 local boards, constituted by the Central Government of India
for Western, Eastern, Northern and Southern areas of the country and are located in
Mumbai, Kolkata, New Delhi & Chennai.
7. RBI is made up of:
•Central Office
•Offices and Branches
•Subsidiaries of the RBI
8.
9. Central Office: Currently, the Bank’s Central Office, located at Mumbai, has twenty-seven departments. These departments frame
policies in their respective work areas. They are headed by senior officers in the rank of Principle Chief General Manager.
Central Office Departments
Markets Department of External Investments and Operations
Financial Markets Department
Financial Stability Unit
Internal Debt Management Department
Monetary Policy Department
Regulation and Supervision
Department of Banking Operations and Development
Department of Banking Supervision
Department of Non-Banking Supervision
Foreign Exchange Department
Rural Planning and Credit Department
Urban Banks Department
Research Department of Economic Analysis and Policy
Department of Statistics and Information Management
Services Customer Service Department
Department of Currency Management
Department of Government and Bank Accounts
Department of Payment and Settlement Systems
Support Department of Administration and Personnel Management
Department of Communication
Department of Expenditure and Budgetary Control
Department of Information Technology
Human Resources Development Department
Inspection Department
Legal Department
Premises Department
Rajbhasha Department
Secretary’s Department
10. Offices: These are larger branches or local boards operating in 4 metros. These are
headed by the Chief General Manager designated as Regional Director.
Branches: Smaller than offices and headed by the General Manager. There are 23
branches of RBI all over the India.
23 Branches + 4 offices = 27 units of RBI.
Subsidiaries of RBI:
Following are the fully owned subsidiaries of RBI:
1) NHB (National Housing Bank)
National Housing Bank was set up on July 9, 1988 to promote a sound, healthy,
viable and cost effective housing finance system to all segments of the population
and to integrate the housing finance system with the overall financial system.
2) National Bank for Agriculture and Rural Development (NABARD) promote
development of agriculture, small-scale industries, cottage and village industries,
handicrafts and other rural crafts
3) Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
The Reserve Bank established BRBNMPL in February 1995 to increase production
of bank notes in India. In India before 1995 2 printing presses were there at Nasik
(Maharashtra) and Dewas (M.P.). Later on at Mysore (Karnataka) and Salboni
(W.B.) 2 more printing presses were set up by BRBNMPL.
11. Staff of RBI:
As of June 30 the Reserve Bank had a total staff strength of
20,572. Nearly 46% of the employees were in the officer
grade, 19% in the clerical gadre and the remaining 35%
were sub staff. While 17,351 staff members were attached to
Regional Offices, 3,221 were attached to various Central
Office departments
12. The Indian rupee (sign: ₹; code: INR) is the
official currency of the Republic of India
13. Depreciation of Indian Rupee
When the rupee depreciates against the dollar, it simply means value
of the Indian currency has gone down relatively against the dollar. A
currency will tend to become more valuable when its demand is
higher than supply. This can happen because of two things:
1) increase in rupees in the market; or
2) decrease of dollars in the market.
14. It is important to know that the rupee's value is directly
linked to the amount of US dollars available in the
Indian market which has decreased now a days. India
receives dollars in three ways: through exports, through
foreign investments into India, and through NRI
remittances into India. The less dollars there are in the
market, the more the dollar is worth (basic laws of
demand and supply), and, so, the rupee depreciates.
15. Why amount of US Dollar & value of Indian rupee is
decreasing in Indian Market?
1) Foreign investors are withdrawing their investments :
After global recession of 2008 US Central Federal Bank stopped following
its Cheap Money Policy . Because of this investors withdraw their
investments from many countries including India and US get benefited.
Another reason is political paralysis in India i.e. lack of decision making
power in our leaders
2) NRIs don’t deposit their money in Indian banks:
Because of less facilities in Indian banks as compared to foreign banks NRI
hesitate to deposit their money in Indian banks.
3) Current Account Deficit:
CAD: The CAD occurs when a country’s total import exceeds the total
export.
16.
17. Measures to counter rupee depreciation
1)By Govt. & RBI:
The Indian Government has taken various steps to stem the rupee's
decline.
India's central bank has imposed restrictions on the amount of
money that companies and individuals can send out of the country.
It has also increased the duty on gold imports, one of the biggest
contributors to India's current account deficit, three times this year.
Recently it increased the interest rate at which it lends money to
other banks and also put a cap on their daily borrowings.
18. 2) Our opinion:
a)Comparative cost theory: We should purchase the commodity
whose cost is higher in India and lower in other countries and should not sell the
commodity whose cost is lower in India and higher in another country.
b) Asking Bills and Receipts every time we buy
anything.
We generally do not ask for bills to save few bucks and this encourages shopkeepers
and retailers to generate black money. They do not pay their taxes and this money
goes to foreign banks which actually helps foreign economy to grow.
c)All Indian banks must offer higher interest rates for NRI's to encourage them.
