This document is a presentation about the role of the Reserve Bank of India (RBI) in the Indian banking system. It was presented by Shalu Nisha to Jaspreet Kaur for the BBA course. The presentation covers the introduction and history of RBI, its organizational structure, roles as a monetary authority, issuer of currency and banking licenses, banker's bank, lender of last resort, clearing house, and manager of foreign exchange.

1. Seminar & Group Discussion
BBM-206
Topic-Role Of RBI in Indian
Banking System
Presented To-Jaspreet Kaur Ma’am
Presented By-Shalu Nisha
Roll No.-2004448
Course-BBA Regular
Email id-
shalunisha786@gmail.com

2. TOPICS TO BE COVERED IN
THE PRESENTATION
 INTRODUCTION
 HISTORY OF RBI
 ORGANIZATIONAL STRUCTURE OF
RBI
 STRUCTURE OF BANKING IN INDIA
 ROLE OF RBI IN INDIAN BANKING
SYSTEM
 CONCLUSION

3. INTRODUCTION
The Reserve Bank of India (RBI) is India's Central banking
institution, which controls the monetary policy of the Indian
rupee. It is the apex bank in the Indian Banking System.
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."
The Reserve Bank of India has four zonal offices at :
1. Chennai
2. Delhi
3. Kolkata
4. Mumbai.
It has 19 regional offices & 11 sub-offices.

4. HISTORY OF RBI
 It commenced its operations on 1st April 1935 during the
British Rule in accordance with the provisions of the Reserve
Bank of India Act, 1934 by the recommendation of Hilton-
Young Commission.
 The original share capital was Rupees Five Crores divided into
shares of 100 each fully paid, which were initially owned entirely by
private shareholders.
 Following India's independence, the RBI was nationalized on 1st
January 1949.
 RBI continued to act as the Central Bank for Burma (Myanmar) till
Japanese Occupation of Burma (1942–45) and later up to
April,1947. After the partition of India, the RBI served as the central
bank of Pakistan up to June 1948 when the State Bank of Pakistan
commenced operations.

5. ORGANIZATIONAL
STRUCTURE OF RBI
 The Central Board of Directors is
the main committee of the RBI.
The Government of India appoints
the directors for a 4-year term.
 The Board consists of a
Governor, and not more than 4
Deputy Governors, 4 Directors to
represent the regional boards, 2
from the Ministry of Finance and
10 other directors from various
fields.
 The bank is headed by the
Governor and the post is currently
held by economist Shri
Shaktikanta Das. There are 4
Deputy Governors, Rabi Sankar,
Rajeshwar Rao, M. D. Patra, M.
K. Jain.

7. ROLE OF RBI IN INDIAN
BANKING SYSTEM
MONETARY AUTHORITY-
 RBI controls the supply of money in the
economy by its control over interest rates in
order to maintain price stability and achieve
high economic growth using Monetary Policy.
ISSUER OF CURRENCY-
 The bank issues and exchanges currency
notes and coins and destroys the same when
they are not fit for circulation. The objectives
are to issue bank notes and giving public
adequate supply of the same, to maintain the
currency and credit system of the country to
utilize it in its best advantage, and to maintain
the reserves.

9. ROLE OF RBI IN INDIAN
BANKING SYSTEM
ISSUER OF BANKING LICENSE-
 Every Bank has to obtain a Banking License
from RBI to conduct banking business in India
(As per Sec 22 of Banking regulation Act) Since
April 2014, the RBI has granted 23 new banking
licences. Entities / groups in the private sector,
entities in public sector and Non-Banking
Financial Companies (NBFCs) shall be eligible to
set up a bank through a wholly-owned Non-
Operative Financial Holding Company (NOFHC).
They will also need to have a sound & successful
track record of 10 years. Various Banks have
been given the license like: Universal Banks
Payments Bank Small Finance Banks IDFC
Vodafone M- pesa Equitas Holdings Bandhan
Bank Fino PayTech Utkarsh Micro Finance

10. ROLE OF RBI IN INDIAN
BANKING SYSTEM
BANKER’S BANK –
 RBI is bank of all banks in India. As a banker of banks,
RBI:
Enables smooth and swift clearing and settlements of
inter-bank transactions
 Provides efficient means of
funds transfer for all banks Enables banks to maintain
their accounts with RBI for statutory reserve
requirements and maintenance of transaction balances.
 Regulates opening of New ATMS & Branches of
Commercial Banks
 Why RBI is called as banker's bank ?
1. Provides loan to banks/bankers. 2. Accept Deposits of
2. Banks. 3. Rediscount the bills of Banks.

11. ROLE OF RBI IN INDIAN
BANKING SYSTEM
LENDER OF LAST RESORT-
 The banks can borrow from the RBI by
keeping eligible securities as collateral or any
other arrangement and at the time of need or
crisis, they approach RBI for financial help.
Thus RBI works as Lender of the Last Resort
(LORL) for banks.
ACTS AS CLEARING HOUSE-
 Clearing Houses facilitate the exchange of
instruments and processing of payment
instructions at a central point among the
participating banks.
 RBI acts as a Clearing House for settlement of
Banking transactions.
 It is a member bank of the Asian Clearing
Union.
 RBI manages 14 clearing houses of the
country situated in different

12. ROLE OF RBI IN INDIAN
BANKING SYSTEM
MANAGER OF FOREIGN EXCHANGE-
 RBI is required to maintain external value of
Rupee. For this purpose it acts as a custodian of
FOREX.
 On a given day, the foreign exchange rate
reflects the demand for and supply of foreign
exchange arising from trade and capital
transactions. The RBI’s Financial Markets
Department (FMD) participates in the foreign
exchange market by undertaking sales /
purchases of foreign currency to ease volatility in
periods of excess demand for/supply of foreign
currency.
 Administer and enforces the provision of Foreign
Exchange Management Act (FEMA), 1999.

13. Conclusion
 The Reserve Bank of India (RBI) is
India's
Central bank & apex bank in Indian
banking system.
 Commenced business on 1st April
1935 in accordance with the
provisions of the Reserve Bank of
India Act, 1934.
 It Plays an important role in
strengthening, developing and
diversifying the country’s economic &