Rule of RBI in Foreign Exchange market / management
1. Role of RBI in Foreign Exchange
Management
Name Registration No.
o Md Yeakub Hossain 11508749
o Saahil Saundh 11512485
o Amit Deswal 11502928
2. 1. Introduction to RBI
2. Monetary Authority
3. Regulator of the Banking System
4. Regulator of Financial System
5. Regulator of the Credit
6.Regulator of the Foreign Exchange
7.Conclusion
3. Introduction to RBI
ď‚—The central bank of the country is Reserve Bank of
India (RBI)
ď‚—It was established in 1 April 1935 with a share capital
of Rs. 5crores on the basis of the recommendation of
the Hilton Young Commission
ď‚—The share capital was divided into shares of Rs. 100
each fully paid which was entirely owned by private
shareholders in the beginning
ď‚—The govt. Held shares of nominal value of Rs.
2,20,000.
4. Introduction to RBI The Bank was
constituted for the need of
following :
ď‚—To regulate the issue of banknotes
ď‚—To maintain reserves with a view to securing
monetary stability and
ď‚—To operate the credit and currency system of the
country to its advantage.
5. Monetary Authority Objectives
ď‚—Maintaining price stability
ď‚—Ensuring adequate flow of credit to the productive
sectors of the economy to support economic growth
ď‚—Financial stability
ď‚—The relative emphasis among the objectives varies
from time to time, depending on evolving
macroeconomic developments Instruments
ď‚—Cash Reserve Ratio (CRR)
ď‚—Statutory Liquidity Ratio (SLR)
6. Regulator of the Banking System
ď‚—The Reserve Bank regulates and supervises the
nation’s financial system. Different departments of
the Reserve Bank oversees the various entities that
compries Indian’s financial institutions: Urban
Cooperative Regional Rural Banks: Banks (RRB).
7. RBI’S Regulatory Role
ď‚—Licensing
ď‚—Prescribing capital requirement
ď‚—Monitoring governance
ď‚—Setting prudential regulation to ensure solvency and
liquidity of the banks
ď‚—Prescribing lending to certain priority sectors of the
economy
ď‚—Initiating new regulation
8. RBI as Regulator and Supervisor of
Payment and Settlement System
ď‚—The Payment and Settlement Act (PPS Act) gives the
Reserve Bank oversight authority, including
regulation, for the payment and settlement system in
the country.
ď‚—In this role, RBI focus on the development and
functioning of safe, secure and efficient payment and
settlement mechanisms
ď‚—The Reserve Bank has a two-tiered structure. The first
tier provides the basic framework for our payment
system. The second tier focuses on supervision of
framework.
9. RBI as a Regulator of Credit
ď‚—The Reserve Bank of India is the controller of credit i. e.
It has the power to influence the volume of credit
created by bank in India
ď‚—It hold the cash reserves of all the scheduled banks
ď‚—It controls the credit operation of bank through
quantitative and qualitative controls
ď‚—It controls the banking system through the system of
licensing, inspection and calling for information
10. Regulator of the Financial System
ď‚—The institution is also the regulator and supervisor of
the financial system and prescribes broad parameters
of banking operations within which the country’s
banking and financial system function
ď‚—Its objectives are to maintain public confidence in the
system, protect depositor’s interest and provide cost-
effective banking service to public
11. RBI as a Regulator of Foreign
Exchange
ď‚—RBI is responsible for administration of the Foreign
Exchange Management Act, 1999 and regulates the market
by issuing licenses to bank and other select institution to
act as Authorized Dealers in Foreign Exchange. The (FED)
responsible for the regulation and development of the
market
ď‚—Regulating transactions related to the external sector and
facilitating the development of the foreign exchange
market
ď‚—Ensuring smooth conduct and orderly conditions in the
domestic foreign exchange market
ď‚—Managing the foreign currency assets and gold reserves of
the country.
12. Conclusion
ď‚—Central bank plays important role in achieving
economic growth of a developing country
ď‚—It promotes economic growth with stability
ď‚—It helps in attaining full employment balance of
payment disequilibrium and in stabilizing exchange
rate.
ď‚—The RBI operates a number of government mints that
produce currency and coins