Reserve Bank of IndiaReserve Bank of India

It is a central bank of the country. It acts as a It is a central bank of the country. It acts as a guide, regulator, controller and promoter of guide, regulator, controller and promoter of the financial system.the financial system.

RBI was established in 1935.RBI was established in 1935.

Reserve Bank of IndiaReserve Bank of India The The Reserve Bank of IndiaReserve Bank of India (RBI) is the (RBI) is the central bank of of

India, and was established on , and was established on April 1, , 1935 in accordance in accordance with the provisions of the Reserve with the provisions of the Reserve BankBank of India Act, of India Act, 1934. . The Central Office of the Reserve Bank was initially The Central Office of the Reserve Bank was initially established in established in Calcutta but was permanently moved to but was permanently moved to Mumbai in 1937. Though originally privately owned, RBI in 1937. Though originally privately owned, RBI has been fully owned by the has been fully owned by the Government of India since since nationalization in 1949.nationalization in 1949.

Duvvuri Subbarao who succeeded Y. Venugopal Reddy on Duvvuri Subbarao who succeeded Y. Venugopal Reddy on September 2, 2008 is the current Governor of RBI.September 2, 2008 is the current Governor of RBI.

The Preamble of the Reserve Bank of India describes the The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as to regulate the issue basic functions of the Reserve Bank as to regulate the issue of Bank Notes and keeping of reserves with a view to of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate securing monetary stability in India and generally to operate the currency and credit system of the country to its the currency and credit system of the country to its advantage.advantage.

It has 22 regional offices, most of them in state capitals.It has 22 regional offices, most of them in state capitals.

Departments of RBIDepartments of RBI

1.1. Issue DepartmentIssue Department2.2. Banking DepartmentBanking Department3.3. Banking development DepartmentBanking development Department4.4. Department of Banking operationsDepartment of Banking operations5.5. Department of Non Banking companiesDepartment of Non Banking companies6.6. Department of legal affairsDepartment of legal affairs7.7. Exchange control DepartmentExchange control Department8.8. Department of agriculture creditDepartment of agriculture credit9.9. Department of industrial financeDepartment of industrial finance10.10. Economics DepartmentEconomics Department

Departments of RBIDepartments of RBI

11. Department of research and statistics11. Department of research and statistics12. Inspection Department12. Inspection Department13. Department of planning and re-organization13. Department of planning and re-organization14. RBI services board14. RBI services board15. Department of Accounts and expenditure15. Department of Accounts and expenditure16. Department of supervision16. Department of supervision17. Control Department17. Control Department18. External investment and operations18. External investment and operations19. Press relations Department19. Press relations Department20. Industrial and export credit20. Industrial and export credit

Role and functions of RBIRole and functions of RBI1.1. A Currency authorityA Currency authority2.2. Banker to the Govt.Banker to the Govt.3.3. Advisor to the Govt.Advisor to the Govt.4.4. Banker’s BankBanker’s Bank5.5. Lender of the last resortLender of the last resort6.6. Supervision of the BanksSupervision of the Banks7.7. Controller of money and creditController of money and credit8.8. Foreign exchange control and managementForeign exchange control and management9.9. Monetary data publicationMonetary data publication10.10. Promotional FunctionsPromotional Functions i) Promotion of commercial banksi) Promotion of commercial banks ii) Promotion of co-operative banksii) Promotion of co-operative banks iii) Promotion of agriculture and rural creditiii) Promotion of agriculture and rural credit Iv) Promotion of industrial financeIv) Promotion of industrial finance

Prohibitory functions of RBIProhibitory functions of RBI

1.1. RBI can not provide any direct financial RBI can not provide any direct financial Assistance to any industry, trade or businessAssistance to any industry, trade or business

2.2. It can not purchase its on share.It can not purchase its on share.

3.3. It can not purchase shares of any commercial It can not purchase shares of any commercial and industrial undertaking.and industrial undertaking.

4.4. It can not purchase any immovable property.It can not purchase any immovable property.

5.5. It can not give loans on the security of shares It can not give loans on the security of shares and property. and property.

Monetary policyMonetary policy

Monetary policy refers to the use of official Monetary policy refers to the use of official instruments under the control of the central instruments under the control of the central bank to regulate the availability, cost and use bank to regulate the availability, cost and use of money and credit with the aim of achieving of money and credit with the aim of achieving optimum levels of output and employment, optimum levels of output and employment, price stability, balance of payments price stability, balance of payments equilibrium or any other goals set by the state.equilibrium or any other goals set by the state.

The measures/ Techniques of credit The measures/ Techniques of credit controlcontrol

1.1. Quantitative credit controlQuantitative credit control

2.2. Selective credit controlSelective credit control

1. Quantitative credit control1. Quantitative credit control

1.1. Bank rateBank rate

2.2. Cash reserve ratioCash reserve ratio

3.3. Statutory liquidity ratioStatutory liquidity ratio

4.4. Open market operationsOpen market operations

2.Selective credit control2.Selective credit control

The regulation of credit for specific purpose is The regulation of credit for specific purpose is termed as selective credit control.termed as selective credit control.

Some of the selective measures of RBI:-Some of the selective measures of RBI:-

1.1. DirectionsDirections

2.2. RationingRationing

3.3. Margin requirementMargin requirement

4.4. Moral suasionMoral suasion