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Submitted by: Bachkaniwala
Priyanka
Bavda Nikita
Lalwani Sonam
Submitted to : Mr. Paresh Dave
S. R. Luthra Institute of
INTRODUCTION









It is the Central Bank of India
Established on 1 April 1934
under the RESERVE BANK OF
INDIA ACT,1934.
It started functioning from April
1,1935.
Its headquarters are in Mumbai
(Maharashtra) since 1937.
Its present governor is Duvvuri
Subbarao.
It has 22 regional offices, most
of them are in State capitals
It has 26 offices in which four
are regional offices located in
metropolitan cities.
Brief History







It was set up on the recommendations of the
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. The govt. had a
nominal value of shares of INR 2,20,000. Later
on in 1949, the bank was nationalised and is fully
owned by the Govt. of India.
Since nationalization in 1949, the Reserve Bank
is fully owned by the Government of India.
Its First governor was Sir Osborne A. Smith April
1, 1935 to June 30, 1937
 The first Indian Governor was “Sir Chintaman
D.Deshmukh” (August 11, 1943 to June 30, 1949)
 On June 27, 2006, the Union Government of
India reconstituted the Central Board of Directors
of the Reserve Bank of India (RBI) with 13
members, including Azim Premji and Kumar
Mangalam Birla.

Governors
Sir Osborne A. Smith
April 1, 1935 to June 30, 1937

Sir Chintaman D.Deshmukh
August 11, 1943 to June 30, 1949
INDIAN
Governors
Dr. Y.V.Reddy September 6, 2003 to
September 5, 2008

Dr. D. Subbarao September 5, 2008 onwards
Preamble


The Preamble of the Reserve Bank of India describes the
basic objectives 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."



The preamble prescribes the objectives as:
 to secure monetary stability within the country

To operate the currency and credit system to the
advantage of the country.
Organization of RBI
Central Board
 Local Board

Central Board (1 of 2)


The board is appointed by the Government of
India as per the Reserve Bank of India Act.



Appointed/nominated for a period of four years



The functions of the central board are general
superintendence and direction of the bank’s

affairs.
 Official
 Non

directors

official directors
Local Board


There are four Local Board



One each for the four regions of the country in

Mumbai, Calcutta, Chennai and New Delhi


Membership:

Consist

of

five

members

each

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.
Roles of RBI









Monetary Authority
Regulator & Supervisor of Financial System
Banker to the government
Manager of Foreign Exchange
Issuer of Currency
Developmental Role
Banker to the banks
Formulate Monetary policy
Objective:

Maintain

price

stability

and

ensuring adequate flow of credit in the
economy.

What R.B.I does….


It formulates, implements and monitors the

monetary policy.


Instruments: qualitative & quantitative.
Quantitative Measures
BANK RATE also called discount rate 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

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.



When the repo rate increases borrowing from the central
bank becomes more expensive.



In order to increse the liquidity in the market, the central
bank does it.



The present repo rate is 8%
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.



This is typically done on a quarterly basis to control inflation
and stabilize the country’s exchange rates.



A fluctuation in bank rates Triggers a Ripple-Effect as it
impacts every sector of a country’s economy.



A change in bank rates affects customers as it influences
Prime Interest Rates for personal loans.



The present bank rate is 9%
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 7%
Regulate & Supervise the
Financial System
Objective: To Maintain Public confidence in the
system, protect depositor’s interest & provide
cost effective banking services to the public.
What R.B.I does…..
 Prescribes broad parameters of banking
operations within which the country's banking
and financial system functions.
 The Reserve Bank of India performs this
function under the guidance of the Board for
Financial Supervision (BFS).
 Lender of last resort
Banker to the Government
•

Keeping the cash balances of the Government as
deposits free of interest.

•

Receiving and making payments on behalf of the
Govt.

•

Carrying out the Govts’ exchange remittances and
other banking operations.

•

Helping both Central and State Govts float new
loans and mange public debt.

•

Making ways and means advances to the state
and local authorities.

•

Acting as advisor to the Govt. on all monetary and
banking matters.
Manager of Foreign
Exchange facilitate external
Objective: To




trade and
payment and promote orderly development
and maintenance of foreign exchange market
in India.
What R.B.I does…..
It acts as a custodian and Manages the
Foreign Exchange Management Act, 1999.
RBI buys and sells foreign currency to
maintain the exchange rate of Indian Rupee
v/s
foreign currencies like the US
Dollar, Euro, Pound sterling and Japanese
yen.
Issue of Currency
Objective: To ensure adequate quantity of
supplies of currency notes and coins of good
quality.
What R.B.I does…..
 Issues new currency and destroys currency and
coins not fit for circulation.
 It has to keep in forms of gold and foreign
securities as per statutory rules against notes &
coins issued.
Banker to banks
• Maintains banking accounts of all scheduled
banks.

• RBI also regulates the opening /installation
of ATM Fresh currency notes for ATMs are
supplied by RBI.
• RBI regulates the opening of branches by
banks.
• It ensures that all the N.B.F.S follow the
Know Your Customer guidelines.
Developmental Role
Objective : To develop the quality of banking
system in India.
What R.B.I does……
 Performs a wide range of promotional
functions to support national objectives.
 To establish financial institutions of national
importance, for e.g:
NABARD,IDBI etc.
Functions
1.

Issue of currency
Functions (contd.)
2. Banker to Govt.:
 Agent of all Central & State Govt.
 Obligations to transact Govt.
business
 Acts as advisor in Govt. & Public
matters
 Issue of debt instruments like
bonds, T-bills
Functions (contd.)
3. Banker’s bank & Lender of the last resort:

According to the Banking Companies Act 1949, every
scheduled bank was required to maintain the Reserve Bank
a cash reserve at the rates prescribed by RBI from time to
time

Controls the liquidity in the banking system

Lends to the bank as a refinancing function in case of
exigencies
4. Controller of credit:

Volume of credit through open market transactions/reducing
bank rate

Permission of opening a new branch

Weekly return of details

Power to inspect the accounts of any commercial banks
Functions (contd.)
 Powers of RBI:
1) Holds the cash

2)

3)
4)

reserves for all
scheduled banks
Controls the credit
operations of bank
through quantitative &
qualitative controls
Controls the banking
system
To provide rediscount
and refinance facilities
to scheduled banks
Functions (contd.)
5. Custodian of foreign exchange
reserves:
 Maintains official rate of
exchange by intervening
market operations which can
be active or passive
 Monitoring the movement of
exchange rates with the help of
Real Effective Exchange
Rate(REER)
 Replacement of FERA with
FEMA
Functions (contd.)
6. Regulatory & Supervisory
functions
 To prevent risk, avoid
financial crises, protect
depositors’ interest & reduce
asymmetry of information
between depositors and
financial institutions
 Concept of risk mgt. system
 Asset liability management
Subsidiaries of RBI
Fully owned: National Housing Bank(NHB),
Deposit Insurance and Credit Guarantee
Corporation of India(DICGC), Bharatiya
Reserve Bank Note Mudran Private
Limited(BRBNMPL).
 Majority stake: National Bank for Agriculture
and Rural Development (NABARD)
The Reserve Bank of India has recently
divested its stake in State Bank of India to
the Government of India.

Current News about RBI
RBI has penalized 6 more banks for
KYC violation. These banks are
Allahabad Bank, Bank of
Maharashtra, Corporation Bank, Dena
Bank, IDBI Bank and Indian Bank.
 Repo rate:7.25%
 Reverse repo rate: 6.25%
 CRR:4%
 SLR:23%
 GDP Growth forecast:5.5%


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Reserve Bank of India- Management of Financial Services project

  • 1. Submitted by: Bachkaniwala Priyanka Bavda Nikita Lalwani Sonam Submitted to : Mr. Paresh Dave S. R. Luthra Institute of
  • 2. INTRODUCTION        It is the Central Bank of India Established on 1 April 1934 under the RESERVE BANK OF INDIA ACT,1934. It started functioning from April 1,1935. Its headquarters are in Mumbai (Maharashtra) since 1937. Its present governor is Duvvuri Subbarao. It has 22 regional offices, most of them are in State capitals It has 26 offices in which four are regional offices located in metropolitan cities.
  • 3. Brief History      It was set up on the recommendations of the 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. The govt. had a nominal value of shares of INR 2,20,000. Later on in 1949, the bank was nationalised and is fully owned by the Govt. of India. Since nationalization in 1949, the Reserve Bank is fully owned by the Government of India.
  • 4. Its First governor was Sir Osborne A. Smith April 1, 1935 to June 30, 1937  The first Indian Governor was “Sir Chintaman D.Deshmukh” (August 11, 1943 to June 30, 1949)  On June 27, 2006, the Union Government of India reconstituted the Central Board of Directors of the Reserve Bank of India (RBI) with 13 members, including Azim Premji and Kumar Mangalam Birla. 
  • 5. Governors Sir Osborne A. Smith April 1, 1935 to June 30, 1937 Sir Chintaman D.Deshmukh August 11, 1943 to June 30, 1949 INDIAN
  • 6. Governors Dr. Y.V.Reddy September 6, 2003 to September 5, 2008 Dr. D. Subbarao September 5, 2008 onwards
  • 7. Preamble  The Preamble of the Reserve Bank of India describes the basic objectives 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."  The preamble prescribes the objectives as:  to secure monetary stability within the country To operate the currency and credit system to the advantage of the country.
  • 8. Organization of RBI Central Board  Local Board 
  • 9. Central Board (1 of 2)  The board is appointed by the Government of India as per the Reserve Bank of India Act.  Appointed/nominated for a period of four years  The functions of the central board are general superintendence and direction of the bank’s affairs.  Official  Non directors official directors
  • 10. Local Board  There are four Local Board  One each for the four regions of the country in Mumbai, Calcutta, Chennai and New Delhi  Membership: Consist of five members each Appointed by the Central Government For a term of four years
  • 11.  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.
  • 12. Roles of RBI        Monetary Authority Regulator & Supervisor of Financial System Banker to the government Manager of Foreign Exchange Issuer of Currency Developmental Role Banker to the banks
  • 13. Formulate Monetary policy Objective: Maintain price stability and ensuring adequate flow of credit in the economy. What R.B.I does….  It formulates, implements and monitors the monetary policy.  Instruments: qualitative & quantitative.
  • 14. Quantitative Measures BANK RATE also called discount rate 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 
  • 15. 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.  When the repo rate increases borrowing from the central bank becomes more expensive.  In order to increse the liquidity in the market, the central bank does it.  The present repo rate is 8%
  • 16. 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.  This is typically done on a quarterly basis to control inflation and stabilize the country’s exchange rates.  A fluctuation in bank rates Triggers a Ripple-Effect as it impacts every sector of a country’s economy.  A change in bank rates affects customers as it influences Prime Interest Rates for personal loans.  The present bank rate is 9%
  • 17. 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 7%
  • 18. Regulate & Supervise the Financial System Objective: To Maintain Public confidence in the system, protect depositor’s interest & provide cost effective banking services to the public. What R.B.I does…..  Prescribes broad parameters of banking operations within which the country's banking and financial system functions.  The Reserve Bank of India performs this function under the guidance of the Board for Financial Supervision (BFS).  Lender of last resort
  • 19. Banker to the Government • Keeping the cash balances of the Government as deposits free of interest. • Receiving and making payments on behalf of the Govt. • Carrying out the Govts’ exchange remittances and other banking operations. • Helping both Central and State Govts float new loans and mange public debt. • Making ways and means advances to the state and local authorities. • Acting as advisor to the Govt. on all monetary and banking matters.
  • 20. Manager of Foreign Exchange facilitate external Objective: To   trade and payment and promote orderly development and maintenance of foreign exchange market in India. What R.B.I does….. It acts as a custodian and Manages the Foreign Exchange Management Act, 1999. RBI buys and sells foreign currency to maintain the exchange rate of Indian Rupee v/s foreign currencies like the US Dollar, Euro, Pound sterling and Japanese yen.
  • 21. Issue of Currency Objective: To ensure adequate quantity of supplies of currency notes and coins of good quality. What R.B.I does…..  Issues new currency and destroys currency and coins not fit for circulation.  It has to keep in forms of gold and foreign securities as per statutory rules against notes & coins issued.
  • 22. Banker to banks • Maintains banking accounts of all scheduled banks. • RBI also regulates the opening /installation of ATM Fresh currency notes for ATMs are supplied by RBI. • RBI regulates the opening of branches by banks. • It ensures that all the N.B.F.S follow the Know Your Customer guidelines.
  • 23. Developmental Role Objective : To develop the quality of banking system in India. What R.B.I does……  Performs a wide range of promotional functions to support national objectives.  To establish financial institutions of national importance, for e.g: NABARD,IDBI etc.
  • 25. Functions (contd.) 2. Banker to Govt.:  Agent of all Central & State Govt.  Obligations to transact Govt. business  Acts as advisor in Govt. & Public matters  Issue of debt instruments like bonds, T-bills
  • 26. Functions (contd.) 3. Banker’s bank & Lender of the last resort:  According to the Banking Companies Act 1949, every scheduled bank was required to maintain the Reserve Bank a cash reserve at the rates prescribed by RBI from time to time  Controls the liquidity in the banking system  Lends to the bank as a refinancing function in case of exigencies 4. Controller of credit:  Volume of credit through open market transactions/reducing bank rate  Permission of opening a new branch  Weekly return of details  Power to inspect the accounts of any commercial banks
  • 27. Functions (contd.)  Powers of RBI: 1) Holds the cash 2) 3) 4) reserves for all scheduled banks Controls the credit operations of bank through quantitative & qualitative controls Controls the banking system To provide rediscount and refinance facilities to scheduled banks
  • 28. Functions (contd.) 5. Custodian of foreign exchange reserves:  Maintains official rate of exchange by intervening market operations which can be active or passive  Monitoring the movement of exchange rates with the help of Real Effective Exchange Rate(REER)  Replacement of FERA with FEMA
  • 29. Functions (contd.) 6. Regulatory & Supervisory functions  To prevent risk, avoid financial crises, protect depositors’ interest & reduce asymmetry of information between depositors and financial institutions  Concept of risk mgt. system  Asset liability management
  • 30. Subsidiaries of RBI Fully owned: National Housing Bank(NHB), Deposit Insurance and Credit Guarantee Corporation of India(DICGC), Bharatiya Reserve Bank Note Mudran Private Limited(BRBNMPL).  Majority stake: National Bank for Agriculture and Rural Development (NABARD) The Reserve Bank of India has recently divested its stake in State Bank of India to the Government of India. 
  • 31. Current News about RBI RBI has penalized 6 more banks for KYC violation. These banks are Allahabad Bank, Bank of Maharashtra, Corporation Bank, Dena Bank, IDBI Bank and Indian Bank.  Repo rate:7.25%  Reverse repo rate: 6.25%  CRR:4%  SLR:23%  GDP Growth forecast:5.5% 