3. Introduction
Reserve Bank of India is the central bank of India .The reserve
bank of India was established on 1st April 1935,under the
reserve bank of India act,1934.
This bank was constituted as a private shareholders bank with
a fully paid up share capital of Rs.5crores,divided into 5,00,000
fully paid up shares of Rs.100 each.
Bank was nationalized with effect from January ,1949 under the
reserve bank Act,1948.
The entire share capital of the bank was acquired by the central
government after giving adequate compensation to the share
holders .
Thus ,from 1st January 1949,reserve bank of India became a
state owned institution.
4. Definition and Objective
Central Bank is an institution charged with the
responsibility of managing the expansion and
contraction of the volume of money in the interest of
general public welfare.
To regulate the issue of currency in India
To maintain and manage the foreign exchange
reserves of the country
To establish monetary stability in the country.
To develop financial structure of the country on the
basis of the national economic social objectives and
policies.
5. History of RBI
1935–1950
The bank was founded in 1935 to respond to economic troubles after
the First World War. The Preamble of the Reserve Bank of India
describes the basic functions of the Reserve Bank as to regulate the
issue of bank notes, to keep reserves with a view to securing monetary
stability in India and generally to operate the currency and credit
system in the best interests of the country. The Central Office of the
Reserve Bank was initially established in Kolkata, Bengal, but was
permanently moved to Mumbai in 1937.
1960–1969
As a result of bank crashes, the reserve bank was requested to
establish and monitor a deposit insurance system. It should restore the
trust in the national bank system and was initialized on 7 December
1961.
6. 1969–1985
Between 1969 and 1980, the Indian government nationalized 6
more commercial banks; following 14 major commercial banks
being nationalized in 1969 . The branch was forced to establish
two new offices in the country for every newly established office
in a town. The oil crises in 1973 resulted in increasing inflation,
and the RBI restricted monetary policy to reduce the effects.
1985–1991
A lot of committees analyzed the Indian economy between
1985 and 1991. Their results had an effect on the RBI.
7. 1991–2000
The national economy came down in July 1991 and the Indian rupee was
devalued. The currency lost 18% relative to the US, and the Narsimahmam
Committee advised restructuring the financial sector by a temporal
reduced reserve ratio as well as the statutory liquidity ratio. published in
1993 to establish a private banking sector. This turning point should
reinforce the market and was often called liberal. The central bank
deregulated bank interests and some sectors of the financial market like
the trust and property markets.
Since 2000
The Foreign Exchange Management Act from 1999 came into force in
June 2000. It should improve the foreign exchange market, international
investments in India and transactions. The RBI promoted the development
of the financial market in the last years, allowed online banking in 2001
and established a new payment system in 2004–2005
8. Management of RBI
One governor and 4 deputy governors appointed by
the government of India for a period of 5 years.
4 directors nominated from the local boards located
at,mumbai,kolkata,chennai and new Delhi.
10 other directors nominated by government of India
whose term is 4 years.
An official of the government of India to attend the
meetings of the central board.
9. Organization of RBI
Issue department
Banking Department
Banking Development Department
Department of banking operation
Non-Banking Companies Department
Agricultural credit department
Industrial finance department
Exchange control department
Legal affairs department
Department of research and statistics
Planning and reorganization department
Economic department
Inspection department
Services department
Control and supervision department
Financial market department
10. Functions of reserve bank of India
Central banking function:
Issue of currency
Banker to the government
Banker to the banks
Custodian of foreign exchange reserve of the country
Regulation and control of credit
Training in banking
Collection and publication of static's
11. General banking function:
Acceptance of deposits
grant of loans
to deal in bills
to deal in securities
To deal in foreign exchange
To borrow money
To deal with the banks of other countries
To provide save custody
To deal in costly metals
12. Current bank rates
Bank Rate 9.50%
Repo Rate 8.50%
Reverse Repo Rate 7.50%
Cash Reserve Ratio (CRR) 4.75%
Statutory Liquidity Ratio (SLR) 24.0%
Base Rate 10.00%–10.75%
Reserve Bank Rate 4%
Deposit Rate 8.50%–9.25%
13. Monetary policy of RBI
Right from 1949,the RBI monetary policy has been
guided by 3 objectives:
Stability
Growth
Social justice
Main focus of reserve bank’s monetary policy has been
on controlled expansion of money supply.
Since the beginning of the first 5 yr plan the principal
objective of the monetary policy as adopted by the
RBI have been economic development and price
stability
14. Methods of Credit Control By RBI
Open market operations
Bank rate
Variable reserve ratios
Statuary liquidity ratio (SLR)
Liquidity adjustment facility
Credit monitoring arrangement
15. Achievements of RBI
It has very successfully regulated credit to meet the
requirements of trade, industry and agricultural
It has developed and promoted sound banking practices in the
country
The RBI has successfully promote the institutions
nationalization of saving by-
Promoting banking habits
Extending banking facilities all over the country
Establishing specialized financial agencies
• As a guardian of the banking system the reserve bank has
been providing insurance and credit guarantee facilities to the
banks through DICGC
