Reserve Bank Of India is the Apex Bank of India responsible to take care of banking and credit system of the country.Its main function is to form the monetary policies and rules and regulations for efficient and transparent banking system..
3. Contents
Introduction
What does Bank mean?
About Reserve Bank of India
Establishment
Preamble
Objectives
Functions
Organizational Structure
Tools of Monetary Control
4. Introduction
In this rapidly changing world the scenario of banking
is also changing. In earlier days there was deep influence
of the unorganized financial system, but now the things
are different. We now have in our country ,the organized
financial system which comprises of financial
institutions, financial market, financial instruments and
financial services. These components of financial system
are governed by some regulatory bodies which are:
1. The Ministry of Finance
2. Securities and Exchange Board of India
3. Reserve Bank of India
5. What does Bank mean?
The most important component of Financial System is
Financial Institutions. Banks are the part of the Financial
Institutions.
The word ‘Bank’ means “an organization where people
and businesses can invest and borrow money, change it
to foreign currency, etc.”
In India “Banking” has been defined by the statue viz the
‘Banking Regulation Act 1949 (vide section 5b,c)as
follows:
“Accepting for the purpose of lending or investment of
deposits of money from the public, repayable on demand
or otherwise and withdrawal by cheque, draft, and order
or otherwise”
6. About RBI
Head quarters : Shahid Bhagat Singh Marg
Mumbai, Maharashtra
Established : April 1,1935
Governor : Raghuram Rajan
Currency : Indian Rupee
ISO 4217 Code : INR
Reserves : US$351.92 billion
Bank Rate : 7.75%
Interest on reserves : 4%
Website : http://www.rbi.org.in/
RBI seal :
7. The Reserve Bank of India commonly known as
the Central Bank of India is one of the Regulatory
Bodies that governs the Financial System
especially the Financial Institutions (Banking
Institutions and Non-Banking Financial
Institutions).
Non-Banking Financial Institutions includes LIC
of India,HDFC,MPFC etc
Banking sector comprises of as shown in the
figure:
8. Banking Institutions
Scheduled and
Non Scheduled
Bank
Public Sector
Banks
Co-operative
Banks
Private Sector
and Foreign
Banks
1.Cooperativ
e Bank
2.Commerci
al Banks
3.Foreign
Scheduled
Banks
4.Indian
Scheduled
Banks
1.State Bank
Group and
Nationalised
Banks
2.Regional
Rural Banks
1.Rural
Cooperativ
-e Banks
2.Urban
Cooperativ
-e Banks
9. Establishment
The Reserve Bank Of India which controls the monetary
policies of the Indian Rupee was established on April
1,1935 during the British Raj in accordance with the
provisions of the “Reserve Bank Of India Act 1934.
The share capital was divided into shares of 100 each
fully paid,which was entirely owned by the private
shareholders in the beginning.
Following India’s Independence in 1947, the RBI was
nationalised in the year 1949.
The central office of the RBI was initially established in
calcutta but was permanently shifted to Mumbai in 1937.
10. 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."
11. Objectives
To manage the monetary and credit system in the country.
To establish internal and external value of the currency(Rs.).
For balanced and systematic development of banking in the
country.
For the development of organized money in the country.
For proper arrangement of industrial and agricultural finance
and the mgmt of public debt.
For centralization of cash reserves of commercial banks.
To establish monetary relations with other countries and
international financial institutions.
To maintain balance between demand and supply of currency.
12. Functions
Monetary Authority
Regulator and supervisor of the financial system
Manager of Foreign Exchange
Issuer of currency
Development of Financial System
Banker to Banks
14. Central Board
The RBI’s affairs are governed by the central board of directors.
The Board is appointed by the Govt. of India in keeping with the
RBI Act.
Function: general superintendence and direction of bank affairs.
1.appointed /nominated for the period of 4 years.
2.constitutes of 20 members in the following way:
Official Directors : a)Governor
b)4 Deputy governors
Non Official Directors: a)nominated by Govt-10 directors
from various fields and 2 Govt officials.
b)others: 4 Directors :one each from four local boards
15. Local Board
One each for the four regions of the country in
Mumbai, Calcutta, Chennai and New Delhi
Membership: consist of five members each and
appointed by the Central Government for a term of
four years
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.
16. Offices and Branches
The RBI has four zonal offices
in:Mumbai(west),Delhi(north),Kolkata(east) and Chennai(south)
It has 19 regional offices at most state capitals and at a few major
cities in India.Few of them are
Ahemdabad,Banglore,Bhopal,Bhubaneshwar,Chandigarh,Chennai,
Guwahati,Hydrabad,Jaipur,Jammu,Kanpur,Kolkata,Lucknow,Mum
bai,Nagpur Patna,Thiruvananthapuram.
Nine sub-offices at
Agartala,Dehradun,Gangtok,Kochi,Panaji,Raipur,Ranchi,Shillong,S
himla and Shrinagar.
The SBI represents RBI and work as its agent in places where there
are no offices of the RBI and its associate banks are the agents of the
RBI.
17. Tools for Monetary Control
Reverse repo rate
Cash reserve ratio
Statutory liquidity ratio
Bank rate
Repo rate
Selective credit control
Marginal standing facility rate
Open market operations
