The Reserve Bank of India (RBI) was established in 1934 and nationalized in 1949. It regulates the country's banking system and monetary policy. The RBI has the following key objectives: to stabilize the monetary unit, maintain the bank's monopoly on note issuing, not operate for profit, and act as banker to the government. It controls credit and money supply using various tools like the bank rate, cash reserve ratio, statutory liquidity ratio, open market operations, and selective credit controls. The RBI is governed by a central board and local boards advise on regional matters.

1. RBI
By
Shraddha visariya
Sybms (sem-3)
Roll no- 39

2. 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.”

3. Background
Established under RBI Account of 1934
Started functioning from April 1, 1935
It was nationalized in January , 1, 1949
Share capital Rs.5.00 Cr of Rs.100.00
each
Government held nominal shares of
Rs.2.22 lac
At the time of Nationalization Govt. paid
Rs.118.58ps per share of Rs.10.00

4. objectives
The Objective of any Central Bank is-
to stabilize the monitory unit
It has monopoly of note issuing
It is not a profit center
It will not compete with the commercial
banks
It is a Bank of Issue
It is a Banker to the government
Custodians of Nations Credit
Controller of Credit

5. RBI SHARE CERTIFICATE

6. Central Board
The Reserve Bank's affairs are governed by a central board
of directors. The board is appointed by the Government of
India in keeping with the Reserve Bank of India Act.
Appointed/nominated for a period of four years
Constitution:
Official Directors
•Full-time : Governor and not more than four Deputy
Governors
Non-Official Directors
•Nominated by Government: ten Directors from
various fields and one government Official
•Others: four Directors - one each from four local
boards
Functions : General superintendence and direction of the
Bank's affairs

7. CB CONTINUED…..
Dr. Y.V.Reddy – Governor
Dr. Rakesh Mohan – Deputy Governor
Shri. V.Leeladhar – Deputy Governor
Smt.Shyamala Gopinath – Deputy Governor
Smt. Usha Thorat – Deputy Governor

8. Local Boards
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.

9. Powers and
responsibilities
of RBI in respect of regulation
of banks
The Reserve Bank of India has been entrusted
with the responsibility under the Banking
Regulation Act, 1949 to regulate and supervise
banks' activities in India and their branches
abroad. While the regulatory provisions of this
Act prescribe the policy framework to be
followed by banks, the supervisory framework
provides the mechanism to ensure banks'
compliance with the policy prescription.

10. Banking Supervision
Organisation of the Supervision Function
Supervision of overseas branches of
Indian banks
Uniform guidelines on Write-off/
compromise settlements
Checklist for Inspecting Officers
Study of large value bank frauds
Nostro Accounts- Reconciliation
Non- SLR Investments
Transparency and Disclosure
Internal controls and housekeeping in
banks

11. Note Issuing
The assets of the Issue Department
against which bank notes are issued
are….
Gold coins and Bullions
Foreign Securities
Rupee Coins
Government of India Rupee Securities
The Bills of Exchange and Promissory
notes payable in India, which are eligible
for purchase by the bank under Sec22 of
RBI act
Minimum Reserve System since 1957
Rs.200 Crore of which Rs.115 crore in gold

12. RBI Monetary Policy
Monitory Policy refers to the policy of the
central bank to control money supply, credit
and inflation in economy
Monetary policy is a part of overall
economic policy
To accelerate economic development to
raise national income and standard of living
to control inflationary pressures in the
economy

13. RBI’s CREDIT CONTROl
Measures
RBI has various tools to use to
maintain monetary stability--
Quantitative Controls – to
regulate the volume of total credit
Qualitative(Selective Credit)
Controls – to regulate the flow of
credit to various uses and
purposes

14. Controls
Quantitative-
Bank Rate - 6% (with effectfrom30th
April, 2003 )
Open Market Operations – Buying and
Selling of Securities
CRR-25.0%
SLR-7.5%
REPO – 9% (at present)
Rev REPO - 6% (at present)
Qualitative-
Selective Credit Control

15. WHAT’s THAT
Bank Rate CRR
This is the rate at which RBI Also called the cash reserve
lends money to other banks ratio, refers to a portion of
(or financial institutions) deposits (as cash) which
banks have to keep/maintain
SLR with the RBI.
Besides the CRR, banks are required to invest a
portion of their deposits in government securities as
a part of their statutory liquidity ratio (SLR)
requirements.
Repo (Repurchase) Rate Reverse Repo Rate
Repo rate is the rate at which banks This is the exact
borrow funds from the RBI to meet opposite of repo rate.
the gap between the demand they
are facing for money (loans) and how
much they have on hand to lend.