3. Introduction
• The origins of the Reserve Bank of India can be traced to 1926, when
the Hilton-Young Commission – recommended the creation of a
central bank for India to separate the control of currency and credit
from the Government and to improve banking facilities throughout
the country.
• The Reserve Bank of India Act of 1934 established the Reserve Bank
and after that in in 1949 the Reserve Bank was nationalized and fully
controlled by India.
4. Objective of RBI
The Preamble to the Reserve Bank of India Act, 1934, under which it was
constituted, specifies its objective as “to regulate the issue of Bank
notes and the 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”.
6. Structure of RBI
Subsidiaries of the RBI
• Deposit Insurance and Credit Guarantee Corporation (DICGC)
• National Housing Bank (NHB)
• Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
• National Bank for Agriculture and Rural Development (NABARD)
7. Functions of RBI
• Issue of Currency notes Banker to the government Banker to the
Banks Bank’s Supervision Monetary Regulation and Management
Exchange Management and Control
8. Issue of Currency Notes
• To ensure adequate quantity of supplies of currency.
• Issues new currency and destroys currency & coins out of circulating.
• It has to keep gold and foreign security against the notes and coins
issued.
Banker to the government
Performs all banking function for the central and the state government
and also acts as their banker except that of Jammu and Kashmir.
9. Banker to the Banks
• Maintains banking accounts of all scheduled banks
• RBI also regulates the opening or installation of ATM
• RBI regulates the opening of branches by banks
• RBI also regulates trade of gold.
• It issues guidelines and directives for the commercial banks.
10. Monetary Regulation and
Management
• Maintaining price stability ensuring adequate flow of credit in the
economy
• RBI formulates, implements and monitors the Monitory Policy.
• Instruments of regulating monitory Policy are basically of two
categories:
Quantitative Measures
Qualitative Measures
11. Monetary Regulation
Instruments
Quantitative Measures
• Bank Rate(7.00%)
• Repo Rate(6.50%)
• Reverse Repo Rate(6.00%)
• Cash Reserve Ratio (CRR)(4.00%)
• Statutory Liquidity Ratio (SLR)(21.25%)
Qualitative Measures
• Direct Action
• Moral Persuasion
• Legislation
• Publicity
12. Banks Supervision
• Licensing of Banks
• Branch Licensing Policy
• Approval of Capital, reserves and liquid assets of banks
• Inspection of banks
• Audit
• Control over amalgamation and liquidation
13. Exchange Management and Control
• To facilitate external trade and payment and promote orderly
development and maintenance of foreign exchange market in India.
• It acts as a custodian and Manages the Foreign Exchange
Management Act, (FEMA) 1999.
• RBI maintains the exchange rate of Rupee v/s foreign currencies like
US Dollar, Euro, Pound and Japanese Yen.
14. Conclusion
Hence after knowing all the facts and figures relating the Reserve Bank
of India, it is plausible to conclude that RBI supports our nation’s
economy in a vital manner. Its Policies and decisions, affect the value of
the Indian currency and we can also state that it is the backbone of
Indian Economy.
