ROLE OF RBI By mamta (012)

Shruti singh (014)

Introduction

It is the Central Bank of India Established in “1st April 1935” under the “RESERVE BANK OF INDIA ACT”.

Its head quarter is in Mumbai (Maharashtra). Its present governor is “MR. Raghuram Rajan”.

It has “22 Regional Offices”, most of them in State capitals

Brief history of RBI It was set up on the recommendations of the “Hilton Young Commission”. It was started as Share-Holders Bank with a paid up capital of 5 crores. Initially it was located in Kolkata. It moved to Mumbai in 1937.Initially it was Privately Owned.Since Nationalization in 1949, the Reserve Bank is fully owned by the Government of India.

Structure of RBI 20 central board of directors 1 governor 4 deputy governor 15 directors Local boards Offices of RBI

PREAMBLE

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."

Role of RBI Note Issuing Authority Government Banker Bankers’ Bank Supervising Authority Exchange Control Authority Promoter Of The Financial System Regulator Of Money And Credit

Note Issuing Authority

The Reserve Bank is the nation’s sole note issuing authority

Bank issues notes in the following denominations:

2,5,10,20,50,100,and 500 Exchange notes and coins of one denomination

into other as demanded by the public The bank can issue the notes against the security

of gold coins, foreign securities rupee coins, etc

Government Banker RBI is the banker of the central and state

governments It advances short-term loans to the government and

raises loans from the public. It manages public debt. It purchases and sells through bills and currencies

on behalf to the government. It receives and makes payment on behalf of the

government. To bridge the temporary gap between receipts and

payments – maximum maturity period of these advance is 3 months

Bankers’ bank Special relationship with commercial and co-

operative banks Bank control the volume of reserves of

commercial banks Determines the deposits/credit creating ability of

the bank Bank hold a part or all of their reserves with the

RBI RBI is the ultimate source of money and credit in

India

Supervising Authority RBI has vast power to supervise and control commercial and co-operative

banks Powers : Issue licenses for the establishment of

new banks issue licenses for the setting of bank

branch Maintain cash reserve ratio Inspect working of banks Control the methods of operations of

banks

Exchange control authority Maintain the stability of the external

value of the rupee Task of RBI To Administer the foreign exchange

control To choose the exchange rate system To manage the exchange reserve To interact or negotiate with the

monetary authorities

Promoter of the financial system Money market Agriculture sector Industrial sector Credit delivery

Regulator of money and credit RBI takes into account the following

monetary policies to control money supply and credit –

a)      Open Market Operationsb)      Cash Reserve Ratioc)       Statutory Liquidity Ratiod)      Bank Rate Policye)      Repo Rate and Reverse Repo

Rate

RBI Related News RBI constituted Expert Committee to revise and

strengthen Monetary Policy Framework Cabinet approved the proposal to invest 4.3

Billion $ in the World Bank Bonds RBI issued norms for currency swap window RBI allowed the Non-Resident Investors to buy

Shares under FDI Scheme  Raghuram Rajan succeeded Subbarao as the

23rd Governor of RBI