RESERVE BANK OF INDIA RESERVE BANK OF INDIA www.rbi.org.

in
S-18 S-34 S-65 S-70 Kumar Rajesh Ranjan www.rbi.org.in

K. R. Ranjan, AGM

New Delhi Deepak.K.Awari

Uttam Chand Vinay Singh

Reserve Bank of India was established on 1st April, 1935 under Reserve Bank of India Act, 1934 It was established as a shareholders Bank with paid up capital of Rs. 5 Crores (5 lakh shares of Rs. 100/- each) The ownership of the Bank was transferred to the Central Govt. from 1st January, 1949.

 --------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;

 This

function imposes on the Bank the responsibility of :

Operating monetary policy for maintaining price stability and ensuring adequate financial resources for developmental purposes; Promotion of an efficient financial system; and Meeting the currency requirement of the public

The main functions of the RBI are broadly the same as those of other Central Banks world over It has taken over the central banking functions carried out by the erstwhile Imperial Bank like Banker to the Government and Bankers Bank It has also taken over the functions of note issue and management of foreign exchange from the Central Government

Note issuing authority/ Currency authority,

Banker to the Banks,

Banker to the Government, Management of Foreign Exchange, Monetary Management- to promote the growth of economy and maintaining price stability, Control and supervision over banking system to channelise the bank credit for the productive purpose and safe guard depositors interest

Sole authority for issue of currency in India One rupee coin/ notes and other coins are issued by RBI on behalf of the Government RBIs responsibility is to put currency into circulation, exchange it or withdraw it. All the transactions relating to the issue of currency notes are carried out by the Issue Department which is separated from other departments for accounting purposes

Assets and Liability of Issue Department

Assets - Gold coin and bullion, foreign securities, Rupee Coin, Government of India Rupee Securities of any maturity and bills of exchange and promissory notes payable in India
Liability - The total liability of the issue department is the total notes issued i.e. Notes in circulation and Notes held in the Banking Department

Maintaining the balances of scheduled banks and deposits of non-scheduled and cooperative banks Rediscounting of eligible bills for granting loans and advances to Scheduled Commercial Banks, State Cooperative Banks, RRBs and financial institutions The above functions are carried out by the Deposit Accounts Departments at various offices

Reserve Bank is the banker to the Central Government statutorily and to the State Governments by virtue of agreements RBI provides a full range of banking services to Central/State Government such as acceptance of money on deposit, withdrawal of funds by cheques, receipt and collection of payments to Government and transfer of funds

A large number of branches of agency banks and treasury agencies also undertake government business on behalf of RBI as the RBI offices are located mainly at state capitals
The Government Revenue collected through agency banks/ treasury agencies are remitted to the RBI in due course.

Public Debt Reserve Bank manages the public debt and issues new loans on behalf of Central and State Governments

The administration of public debt also devolves on the RBI, this may involve issue and retirement of loans, payment of interest, and all matters pertaining to debt certificate and registration of debt holding

Maintaining external value of Rupee

Inadequacy of foreign exchange reserves affect the development

Exchange management becomes necessary to ensure judicious use foreign exchange resources on the basis of priorities Recently the foreign exchange restrictions have been almost removed on current accounts and the external value of the rupee is determined by the market forces, RBI has to intervene occasionally

To facilitate the flow of an adequate volume of bank credit to industry, agriculture and trade to meet their genuine need for the overall growth of the economy To keep inflationary pressures under check and restrain undue credit expansion To ensure that the credit is not diverted for undesirable purposes

 Bank

Rate

Reserve Requirements Cash Reserve Ratio Statutory Liquidity Ratio Open

Market Operations (Sale and Purchase of Government Securities) Rate Policies

Interest

Agriculture and rural development Industrial Development Export Promotion Housing Development Development of Government Security market Growth of other components of financial market

Primary responsibility for Regulation,supervision, and development of banking system- it includes Licensing of banks and branch licensing

policy Capital, Reserves and Liquid assets Inspection of banks Control over method of operations Control over management Supervision of banks in liquidation, etc

Regulation to control, govern, provide direction as well as focus to the given system.
Supervision to oversee the performance in terms of prescribed norms, procedures, Legal framework etc. Without supervision all regulatory measures could be useless & Without regulatory measures supervision can not exist.

 Formal

& Informal Formal: Guidelines Directives Targets Prudential Norms New Acts or Amendments to existing Acts

 Informal:

Agreements Memorandum of understanding Code of conduct Corporate Governance Self Regulatory Organisations Internal Control System etc.

 1.

Banking Supervision

Establishment of Board for Financial Supervision Comprehensive three-tier supervisory modelOn-site inspection, Off-site monitoring and periodical external auditing based on CAMELS model /RBS Extensive use of supervision Information Technology for

Initiation of measures to introduce International best practices in Banking and complying with the Core principles for effective supervision prescribed by BASEL committee on Banking Supervision. Issuance of detailed guidelines on Risk Management, Operational risk, market risk, credit risk, and revised draft guidelines on implementation of New Capital adequacy framework, etc.

2.Non Bank Supervision Development Financial Institutions were brought under the regulatory ambit of RBI in 1995 Three tier supervisory frame work for monitoring non-bank financial companies introduced against the back drop of RBI (Amendment) Act 1997 and the Khanna Committee(1995) recommendations on 3 criteria: - size of a NBFC, - type of activity performed,& - the acceptance or otherwise of public deposits

RBI works under the overall guidance and direction of Central Board of Directors, which comprises A Governor and not more than 4 Deputy

Governors appointed by the Central Government. Four directors appointed by the Central Government, one each from the four local boards Ten directors nominated by the Central Govt. One Government official nominated by Central Government.

Local Boards: For each of the four areas of the country there is a Local Board

Local Boards consist of 5 members each appointed by the Central Government for 4 years to represent the territorial and economic interests and the interest of cooperatives

The Local Boards advises the Central Board on matters referred to them

As the chairman of the Central Board of Directors, the Governor is the Banks chief executive authority
The Governor is assisted by 3-4 Deputy Governors and 6-7 Executive Directors The Banks functions are performed by different departments at Central Office at Mumbai and local/branch offices at different parts of the country

 On

the basis of the main functions performed by the RBI, the departments may be classified as:
Currency Management Government and Banks Business Exchange Control and External value of

Rupee Supervision and Control Developmental Monetary Policy and Research Internal administration/ housekeeping

Currency Management
Department of Currency Management (DCM)

Government and Banks Business

Department of Government and Bank Accounts (DGBA) Internal Debt Management Department (IDMD) FMD

Exchange Control and External value of Rupee

Foreign Exchange Department (FED) Department of External Investment and Operations (DEIO)

 Supervision

and Control

Department of Banking Supervision (DBS) Department of Non-Banking Supervision

(DNBS) Department of Banking Operations and Development (DBOD) Urban Banks Department (UBD)

 Developmental

Rural Planning and Credit Department

Monetary

Policy and Research

and

Department of Economic Analysis and Policy

Department

of Statistical Analysis Computer Services Monetary Policy Department

 Internal

Administration/ House Keeping

Secretarys Department Department of Administration and Personnel Management Human Resources Development Department

Department of Expenditure and Budgetary Control

Department of Information Technology Press Relation Division Premises Department

Legal Department
Inspection Department Training Establishments

THANKS FOR PATIENT HEARING