2. Introduction
• Established in April 1935 under the RESERVE BANK OF INDIAN ACT
1934.
• Head Quarters – MUMBAI
• The Reserve Bank of India is the central banking institution of India
and controls the monetary policy of the rupee as well as currency
reserves.
• Shaktikanta Das is serving as the current & 25th governor of the
Reserve Bank of India (RBI).
3. History Of RBI
• It was set up on the recommendations of Hilton Young Commission.
• It was started as share-holders bank with a paid up capital of 5 crores.
• Initially it was located in Kolkata
• It moved to Mumbai in 1937
• Initially it was privately owned
• Since 1949, the RBI is fully owned by the Government of India.
• Its First governor was Sir Osborne A.Smith
• The First Indian Governor was “Sir Chintaman D.Deshmukh.
6. REGIONAL OFFICE AND SUBSIDARIES
• Has 27 regional offices.
• Has five training establishments
• College of Agricultural Banking and Reserve Bank of India Staff College –
Pune.
• National Institute for Bank Management- Pune.
• Indira Gandhi Institute for Development and Research - Mumbai.
• Institute for Development and Research in Banking Technology (IDRBT)-
Hyderabad.
SUBSIDIARIES
• Deposit Insurance and Credit Guarantee Corporation of India(DICGC).
• Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
7. FUNCTIONS OF RBI
• Financial supervision.
• Monetary management.
• Issue of currency.
• Banker to government.
• Banker to bank.
• Formulate monetary policy.
• Financial regulation and management.
• Manager of foreign exchange.
• Development role
8. Financial Supervision
The Reserve Bank of India performs this function under the guidance of
the Board for Financial Supervision (BFS). The Board was constituted in
November 1994 as a committee of the Central Board of Directors of the
Reserve Bank of India.
• Objective
• Primary objective of BFS is to undertake consolidated supervision of
the financial sector comprising commercial banks, financial institutions
and non-banking finance companies.
9. Constitution
• The Board is constituted by co-opting four Directors from the Central
Board as members for a term of two years and is chaired by the
Governor. The Deputy Governors of the Reserve Bank are ex-officio
members. One Deputy Governor, usually, the Deputy Governor in
charge of banking regulation and supervision, is nominated as the
Vice-Chairman of the Board.
BFS meetings
• The Board is required to meet normally once every month. It
considers inspection reports and other supervisory issues placed before
it by the supervisory departments
10. Monetary authority
• Main monetary authority of the country.
• It formulates, implements and monitors the monetary policy as well
as it has to ensure an adequate flow of credit to productive sectors.
• The RBI controls the monetary supply, monitors economic indicators
like the gross domestic product and has to decide the design of the
rupee banknotes as well as coins.
11. Issuer of currency
• Design, printing and distribution.
• The bank issues and exchanges or destroys currency and coins not fit
for circulation.
• The objectives are giving the public adequate supply of currency of
good quality and to provide loans to commercial banks to maintain or
improve the GDP.
12. Minimum Reserve System
• Principle of Currency Note Issue.
• RBI can issue currency notes as much as the country requires,
provided it has to make a security deposit of Rs. 200 crores, out of
which Rs. 115 crores must be in gold and Rs. 85 crores must be FOREX
Reserves.
• This principle of currency notes issue is known as the 'Minimum
Reserve System'
13. BANKER TO THE GOVERNMENT
• Banker to the Government: performs merchant banking function for
the central and the state governments; also acts as their banker.
BANKER TO THE BANK
Maintains banking accounts of all scheduled banks.
14. FINANCIAL REGULATION AND MANAGEMENT
• As the regulator and the supervisor of the banking system, the
Reserve Bank has a critical role to play in ensuring the system’s safety
and soundness on an ongoing basis.
• The objective of this function is to protect the interest of depositors
through an effective prudential regulatory framework for orderly
development and conduct of banking operations, and to maintain
overall financial stability through various policy measures.
15. Manager of Foreign Exchange
• To facilitate external trade and payment. It acts as a custodian and
Manages the Foreign Exchange Management Act,(FEMA) 1999 and
than Foreign Exchange Regulation Act.
• RBI buys and sells foreign currency to maintain the exchange rate of
Indian Rupee v/s foreign currencies like the US Dollar, Euro, Pound
and Japanese yen.
OBJECTIVE:
• To facilitate external trade and payment and promote orderly
development and maintenance of foreign exchange market in India.
16. DEVELOPMENTAL ROLE
The central bank has to perform a wide range of promotional functions
to support national objectives and industries.
DEVELOPMENTAL ROLE
• SACP.
• KCC.
• NATURAL CALAMITIES.
• LEAD BANK SCHEME.
• EXPORT CREDIT
17. Special Agricultural Credit Plan
View to augmenting the flow of credit to agriculture.
• Under the SACP, banks are required to fix self set targets showing an
increase of about 30 per cent over previous year’s disbursements on
yearly basis (April – March).
• The public sector banks- 1994.
• Private Sector banks -2005-06.
18. Kisan Credit Cards
• 1998-99.
• To enable the farmers to purchase agricultural inputs and draw cash
for their production needs.
• On revision of the KCC Scheme by NABARD in 2004, the scheme now
covers term credit as well as working capital for agriculture and allied
activities and a reasonable component for consumption needs.
• Under the scheme, the limits are fixed on the basis of operational
land holding, cropping pattern.
19. Natural Calamities
• Relief Measures In order to provide relief to bank borrowers in times
of natural calamities, the Reserve Bank has issued standing guidelines
to banks.
• Rescheduling / conversion of short-term loans into term loans;
• Fresh loans;
• Relaxed security and
• Non-compounding of interest in respect of loans converted /
rescheduled; and moratorium of at least one year.
20. Lead Bank Scheme
• Lead Bank Scheme - 1969.
• Here designated banks were made key instruments for local
development and were entrusted with the responsibility of identifying
growth centres, assessing deposit potential and credit gaps and
evolving a coordinated approach for credit deployment in each district,
in concert with other banks and other agencies.
• The Reserve Bank has assigned a Lead District Manager for each
district who acts as a catalytic force for promoting financial inclusion
and smooth working between government and banks
21. Export Credit
• Recognising the important role of exports in maintaining the viability
of external sector and in generating employment, the Reserve Bank
had sought to ensure adequate availability of concessional bank
credit to exporters.
• It took the lead role in setting up the Export Import Bank of India
(EXIM Bank) in January 1982.
22. ROLE OF RBI IN INFLATION CONTROL
• Inflation arises when the demand increases and there is a shortage of
supply There are two policies in the hands of the RBI.
• Monetary Policy: It includes the interest rates. When the bank
increases the interest rates than there is reduction in the borrowers
and people try to save more as the rate of interest has increased.
• Fiscal Policy: It is related to direct taxes and government spending.
When direct taxes increased and government spending increased than
the disposable Income of the people reduces and hence the demand
reduces
23. Quantitative Measures
• Quantitative Measures “BANK RATE” also called “Discount Rate”.
• It also includes “Repo Rate”.
• “Open Market Operations” buying and selling of government
securities.
• “Variable Reserve Ratio” it includes C.R.R and S.L.R
25. BANK RATE
• It’s the interest rate that is charged by a country’s central bank on loans
and advances to control money supply in the economy and the banking
sector.
• The present bank rate is 6.75%.
REPO RATE
• Whenever the banks have any shortage of funds they can borrow it from
the central bank. Repo rate is the rate at which our banks borrow currency
from the central bank.
A reduction in the repo rate will help banks to get Money at a cheaper rate.
The present repo rate is
26. REVERSE REPO RATE
• It’s the rate at which the banks park surplus funds with reserve bank.
• While the Repo rate is the rate at which the banks borrow from the
central bank.
• It is mostly done , when there is surplus liquidity in the market by the
central bank.
• The present reverse repo rate is
27. CASH RESERVE RATIO
• Cash Reserve Ratio (CRR) is the amount of Cash(liquid cash like
gold)that the banks have to keep with RBI.
• The present CRR rate is ….%
28. STATUTARY LIQUIDITY RATIO
• It is the amount a commercial bank needs to maintain in the form of
cash, or gold or govt. approved securities (Bonds) before providing
credit to its customers.
• SLR rate is determined and maintained by the RBI (Reserve Bank of
India) in order to control the expansion of bank credit.
• The present SLR rate is …%
29. BASE RATE
• The Base Rate is the minimum interest rate of a Bank below which it
cannot lend, except in cases allowed by RBI.
• 9.80 – 10.25
30. MARGINAL STANDING FACILITY
• The rate at which the scheduled banks could borrow funds from the
RBI overnight, against the approved government securities is termed
as MSF.
• Reserve Bank of India in its monetary policy (2011-12) has defined
the term Marginal Standing Facility rate as the one, under which
scheduled banks could borrow up to 2 % of their respective Net
Demand and time Liabilities funds overnight from the Reserve Bank
of India (RBI) against approved government securities.
• And the present rate is %
31. REGULATION OF BANKING SYSTEM
The prime duty of the reserve Bank is to regulate the banking system of
our country in such a way that the people of the country can trust in
the banking Up to perform its duty. The Reserve Bank has following
powers in this regard:
•Licensing: According to the section 22 of the Banking Regulation Act,
every bank has to obtain license from the Reserve Bank. The Reserve
Bank issues such license only to those banks which fulfill condition of
the bank
32. REGULATION OF BANKING SYSTEM
• Management: Section 10 of the Banking Regulation Act embowered
the Reserve Bank to change manager or director of any bank if it
considers it necessary or desirable.
• Branch Expansion: Section 23 requires every bank to take prior
permission from Reserve Bank to open new places of business in
India.
• Power of inspection of Bank: Under Section 35, the Reserve Bank may
inspect any bank and its books and accounts either at its own
initiative or at the instance of the Central Government
33. PUBLICATIONS OF RB
• Annual
• Annual Report
• Report on Trend and Progress of Banking in India
• Report on Currency and Finance
• Handbook of Statistics on the Indian Economy
• State Finances: A Study of Budgets
• A Profile of Banks
• Statistical Tables Relating to Banks in India
• Basic Statistical Returns of Scheduled Commercial Banks in India
34. Half Yearly
• Financial Stability Report
Quarterly
• Macroeconomic and Monetary Development
• Occasional Papers
• Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks
Monthly
• RBI Bulletin
• Monetary and Credit Information Review
Weekly
• Weekly Statistical Supplement
Occasional
• RBI Working Paper Series (Web version
