PALLAVI JOSHI

ROLL NO – 12

REG NO - 7020070050

RESERVE BANK OF INDIA

Meaning

Introduction to RBI

Nationalization of RBI

Role of central bank in under-developed economy

Functions of RBI

Financial Inclusion

Contents

Central bank is a central point to the entire banking

system.

It is the apex financial institution of a country’s economy

through which the economic policy of the country in

general, and monetary policy in particular are

implemented.

MEANING

The RBI is the central bank of the country.

It was established on the recommendations of Hilton

Young Commission.

It has been established as a body corporate under the

Reserve Bank Of India Act, 1934 which came into effect

from 1st April, 1935.

RESERVE BANK OF INDIA

The RBI was started as shareholders bank with a paid-up

capital of Rs. 5 crores was divided in 5 lakhs shares of Rs.

100 each.

On establishment it took over the function of management

of currency from the Government of India and power of

credit control from the Imperial Bank of India.

RESERVE BANK OF INDIA (Contd)

The Reserve Bank was nationalized in 1948 soon after the

independence. The basic reasons for nationalization were

as follows:

There was a trend towards nationalization of central Bank

of the country in all parts of the world after the end of the

second world war.

NATIONALIZATION

The inflationary tendencies had started right from the

beginning of the second world war. In order to control

these tendencies effectively, it was thought proper to

nationalize the RBI, the central bank of country

responsible for credit and currency management.

Nationalization was necessary to use it as an effective

instrument for economic development of the country

NATIONALIZATION (Contd)

Direct dealings with public

Development of integrated commercial banking system

Price stability

Providing manpower training

ROLE OF CENTRAL BANK IN UNDER-DEVELOPED

ECONOMY

Monetary expansion

Proper branch expansion

Ensure balanced Regional Growth

Maintenance low rate of interest

Removal of deficit in the Balance of Payment

ROLE OF CENTRAL BANK IN UNDER-DEVELOPED ECONOMY (Contd)

FUNCTIONS OF RBI

TRADITIONAL FUNCTIONS

CENTRAL BANKING FUNCTIO

NS

GENERAL BANKING FUNCTIO

NS

PROHIBITORY

FUNCTIONS

DEVELOPMENTAL FUNCTIONS

FUNCTIONS OF RBI

CENTRAL BANKING FUNCTIONSNOTE ISSUING

• CLEARING HOUSE FUNCTION• CHANGE OF CURRENCY• TRANSFER OF CURRENCY• PUBLICATION OF INFORMATION• CONTROL OVER NATIONALIZED BANKS• EXPORT ASSISTANCE• TRAINING IN BANKING

REGULATION OF CREDIT

BANKER OF GOVT

REGULATION OF EXCHANGE RATE

OTHER FUNCTIONS

GENERAL BANKING FUNCTIONS

TO ACCEPT DEPOSI

TS

TO DEAL

IN BILLS

LENDING OF

MONEY

TO DEAL

IN FORIGN SECURI

TIES

TO DEAL

IN COSTLY METALS

NEITHER TO PARTICIPATE IN BUSINESS

NEITHER TO PURCHASE SHARES

NEITHER TO PURCHASE IMMOVABLE WEALTH

NOT TO DEAL IN TIME BILL

NOT TO GIVE INTEREST ON PRIVATE SAVINGS

NOT TO ADVANCE LOANS WITH SECURITIES

PROHIBITORY FUNCTIONS

PROMOTION OF

AGRICUTURAL FINANCE

PROMOTION OF

INDUSTRIAL FINANCE

PROMOTION OF EXPORT FINANCE

PROMOTION OF

BANKING

DEVELOPMENTAL FUNCTIONS

Delivery of financial services at an affordable cost to vast sections of disadvantaged and low

income groups

FINANCIAL INCLUSION DEFINITION

Savings

Credit

Insurance

Remittance facilities etc.

FINANCIAL SERVICES INCLUDES

PRODUCTS

No frill account

KYC norms simplified

Introduction of GCC

KCC

OTS for overdue loans up to Rs. 25000/-

MEASURES FOR PROMOTING FINANCIAL

INCLUSION

Micro Finance Development and Equity Fund

Financial Inclusion Fund for Development and

Promotional Interventions

Financial Inclusion Technology Fund to meet cost of

technology

FUNDS FOR FINANCIAL INCLUSION

Regional Rural Banks (RRBs) have been

advised to offer “no frills” account facilities

RRBs have been permitted to set up ATMs

The Reserve Bank has advised scheduled

commercial banks and RRBs to introduce a

General Credit Card scheme (GCC)

MEASURES TAKEN BY RBI REGARDING FINANCIAL

INCLUSION

RBI Is Pushing Commercial Banks Hard To Pass On New

Loan Rates To Its Existing Customers

At Present Many Pvt And Public Sector Banks Have Been

Offering Home Loans At Rates As Low As 8% And For Old

Customers 10% - 12%

RBI Changes Prime Lending Rate System To Base Rate In

Order To Make Credit Market More Transparent

New Base Rate Is Fixed On The Basis Of Cost Of Funds

RBI URGES BANKS TO PASS ON LOWER RATES TO OLD CUSTOMERS

THANKYOU