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The Reserve Bank of India (RBI) is India's central banking institution. Following India's independence in 1947. The Central Office of the RBI was initially established in Calcutta (now Kolkata). the RBI has been fully owned by the Government of India since its nationalization in 1949. The Preamble of the RBI describes its basic functions to regulate the issue of bank notes. ten Government-nominated Directors to represent important elements from India's economy. History 1935–1960 The Reserve Bank of India was founded on 1 April 1935 to respond to economic troubles after the First World War. also known as the Hilton–Young Commission. even though Burma seceded from the Indian Union in 1937. and four Directors to represent Local Boards headquartered at Mumbai.” The Bank was set up based on the recommendations of the 1926 Royal Commission on Indian Currency and Finance. except during the years of the Japanese occupation of Burma (1942–45). 1934 . and generally to operate the currency and credit system in the best interests of the country. The share capital was divided into shares of ₹100 each fully paid which was entirely owned by private shareholders in the beginning. the Bank served as the central bank for Pakistan until June 1948 when the State Bank of Pakistan commenced operations. which controls the monetary policy of the Indian rupee. the RBI was nationalised in the year 1949. with the sketch of the Lion and Palm Tree. The general superintendence and direction of the RBI is entrusted with the 20-member-strong Central Board of Directors— the Governor(currently Duvvuri Subbarao). The RBI plays an important part in the development strategy of the Government of India. However it was decided to replace the lion with the tiger. the national animal of India. as well as the interests of cooperative and indigenous banks. The RBI also acted as Burma's central bank. each and every member of this commission were holding Dr Ambedkar’s book named “The Problem of the Rupee – It’s origin and it’s solution. After the Partition of India in 1947. Though originally set up as a shareholders’ bank. keep reserves to secure monetary stability in India. The original choice for the seal of RBI was The East India Company Double Mohur. four Deputy Governors. working style and outlook presented by Dr Ambedkar in front of the Hilton Young Commission. . It is a member bank of the Asian Clearing Union. Chennai and New Delhi. When this commission came to India under the name of “Royal Commission on Indian Currency & Finance”. one Finance Ministry representative. RBI was conceptualized as per the guidelines. It came into picture according to the guidelines laid down by Dr. Ambedkar. but was permanently moved to Bombay (now Mumbai) in 1937. Each of these Local Boards consist of five members who represent regional interests. It was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act. until April 1947. Kolkata.
The central bank became the central player and increased its policies for a lot of tasks like interests. The oil crises in 1973 resulted in increasing inflation. a further six banks were nationalized. under its first Prime Minister Jawaharlal Nehru. the central bank was ordered to support the economic plan with loans. the Indian government. 1985–1991 A lot of committees analysed the Indian economy between 1985 and 1991. The branch was forced to establish two new offices in the country for every newly established office in a town. 1960–1969 As a result of bank crashes. As a result. the Indira Gandhi-headed government nationalized 14 major commercial banks. and the RBI restricted monetary policy to reduce the effects. Furthermore. the Indira Gandhi Institute of Development Research and the Security & Exchange Board of India investigated the national economy as a whole. The Discount and Finance House of India began its operations on the monetary market in April 1988. The Board for Industrial and Financial Reconstruction. It should restore the trust in the national bank system and was initialized on 7 December 1961. a central bank regulation as part of the RBI. The administration nationalized commercial banks and established. The banks lent money in selected sectors. The Indian financial market was a leading example for so-called "financial repression" (Mackinnon and Shaw). the RBI was requested to establish and monitor a deposit insurance system. The regulation of the economy and especially the financial sector was reinforced by the Government of India in the 1970s and 1980s. 1969–1985 In 1969. developed a centrally planned economic policy that focused on the agricultural sector. founded in July 1988. These measures aimed at better economic development and had a huge effect on the company policy of the institutes.1950–1960 In the 1950s. reserve ratio and visible deposits. Their results had an effect on the RBI. The Government of India restructured the national bank market and nationalized a lot of institutes. The Indian government founded funds to promote the economy and used the slogan Developing Banking. was forced to invest . and the security and exchange board proposed better methods for more effective markets and the protection of investor interests. the National Housing Bank. based on the Banking Companies Act of 1949 (later called the Banking Regulation Act). like agri-business and small trade companies. the RBI had to play the central part of control and support of this public banking sector. Upon Gandhi's return to power in 1980.
This turning point should reinforce the market and was often called neoliberal. The National Stock Exchange of India took the trade on in June 1994 and the RBI allowed nationalized banks in July to interact with the capital market to reinforce their capital base. New guidelines were published in 1993 to establish a private banking sector. It should improve the foreign exchange market.in the property market and a new financial law improved the versatility of direct deposit by more security measures and liberalisation. Role of Reserve Bank of India Bank of Issue Under Section 22 of the Reserve Bank of India Act. allowed online banking in 2001 and established a new payment system in 2004–2005 (National Electronic Fund Transfer). The Reserve Bank has a separate Issue Department which is entrusted with the issue of currency notes. the assets of the Issue Department were to consist of not less than two-fifths of gold coin. The assets and liabilities of the Issue Department are kept separate from those of the Banking Department. The central bank founded a subsidiary company—the Bharatiya Reserve Bank Note Mudran Limited—in February 1995 to produce banknotes. The remaining three-fifths of the assets might . was founded in 2006 and produces banknotes and coins. a merger of nine institutions. Since 2000 The Foreign Exchange Management Act from 1999 came into force in June 2000.. This first phase was a success and the central government forced a diversity liberalisation to diversify owner structures in 1998. The Security Printing & Minting Corporation of India Ltd. The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as agent of the Government. The central bank deregulated bank interests and some sectors of the financial market like the trust and property markets. 1991–2000 The national economy came down in July 1991 and the Indian rupee was devalued. and the Narsimahmam Committee advised restructuring the financial sector by a temporal reduced reserve ratio as well as the statutory liquidity ratio. The RBI promoted the development of the financial market in the last years. The currency lost 18% relative to the US dollar. Originally. 40 crores in value. gold bullion or sterling securities provided the amount of gold was not less than Rs.8% in the last quarter of 2008–2009 and the central bank promotes the economic development. the Bank has the sole right to issue bank notes of all denominations. international investments in India and transactions. The national economy's growth rate came down to 5.
200 crores. Bankers' Bank and Lender of the Last Resort The Reserve Bank of India acts as the bankers' bank. The Reserve Bank has the obligation to transact Government business. via. Due to the exigencies of the Second World War and the post-was period. The system as it exists today is known as the minimum reserve system. these provisions were considerably modified. Since commercial banks can always expect the Reserve Bank of India to come to their help in times of banking crisis the Reserve Bank becomes not only the banker's bank but also the lender of the last resort. every scheduled bank was required to maintain with the Reserve Bank a cash balance equivalent to 5% of its demand liabilites and 2 per cent of its time liabilities in India. Government of India rupee securities. According to the provisions of the Banking Companies Act of 1949. eligible bills of exchange and promissory notes payable in India.e. the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Ra. the . Since 1957. 115 crores should be in gold. It acts as adviser to the Government on all monetary and banking matters. By an amendment of 1962. The Bank makes ways and means advances to the Governments for 90 days. It makes loans and advances to the States and local authorities. The scheduled banks can borrow from the Reserve Bank of India on the basis of eligible securities or get financial accommodation in times of need or stringency by rediscounting bills of exchange. of which at least Rs. the distinction between demand and time liabilities was abolished and banks have been asked to keep cash reserves equal to 3 per cent of their aggregate deposit liabilities. Banker to Government The second important function of the Reserve Bank of India is to act as Government banker. The Reserve Bank is agent of Central Government and of all State Governments in India excepting that of Jammu and Kashmir. Controller of Credit The Reserve Bank of India is the controller of credit i. According to the Banking Regulation Act of 1949.be held in rupee coins. to keep the cash balances as deposits free of interest. to receive and to make payments on behalf of the Government and to carry out their exchange remittances and other banking operations. agent and adviser. It can do so through changing the Bank rate or through open market operations.both the Union and the States to float new loans and to manage public debt. The minimum cash requirements can be changed by the Reserve Bank of India. it has the power to influence the volume of credit created by banks in India. The Reserve Bank of India helps the Government .
Reserve Bank of India can ask any particular bank or the whole banking system not to lend to particular groups or persons on the basis of certain types of securities. Further. The Reserve Bank of India is armed with many more powers to control the Indian money market.000.F. the RBI has the responsibility of administering the exchange controls of the country. 6d. The Reserve Bank has also the power to inspect the accounts of any commercial bank. the Reserve Bank has to act as the custodian of India's reserve of international currencies. Since 1935 the Bank was able to maintain the exchange rate fixed at lsh. the Reserve Bank has the responsibility of maintaining fixed exchange rates with all other member countries of the I. Every bank has to get a licence from the Reserve Bank of India to do banking business within India. its assets and liabilities. The vast sterling balances were acquired and managed by the Bank. According to the Reserve Bank of India Act of 1934. Custodian of Foreign Reserves The Reserve Bank of India has the responsibility to maintain the official rate of exchange. (b) It controls the credit operations of banks through quantitative and qualitative controls. After India became a member of the International Monetary Fund in 1946. 1 = sh. the licence can be cancelled by the Reserve Bank of certain stipulated conditions are not fulfilled. though there were periods of extreme pressure in favour of or against the rupee.6d. the Reserve Bank of India. This power of the Bank to call for information is also intended to give it effective control of the credit system. the Bank was required to buy and sell at fixed rates any amount of sterling in lots of not less than Rs. inspection and calling for information. 10. Besides maintaining the rate of exchange of the rupee. . Since 1956.M. in detail. The rate of exchange fixed was Re. Each scheduled bank must send a weekly return to the Reserve Bank showing. (c) It controls the banking system through the system of licensing. therefore. has the following powers: (a) It holds the cash reserves of all the scheduled banks. Every bank will have to get the permission of the Reserve Bank before it can open a new branch. selective controls of credit are increasingly being used by the Reserve Bank. (d) It acts as the lender of the last resort by providing rediscount facilities to scheduled banks. As supreme banking authority in the country.
were regarded as outside the normal scope of central banking. branch expansion. . the Unit Trust of India in 1964. But only since 1951 the Bank's role in this field has become extremely important. The Reserve Bank was asked to promote banking habit. relating to licensing and establishments. The nationalisation of 14 major Indian scheduled banks in July 1969 has imposed new responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid development of the economy and realisation of certain desired social objectives. The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation. the Industrial Development Bank of India also in 1964. to eliminate moneylenders from the villages and to route its short term credit to agriculture.Supervisory functions In addition to its traditional central banking functions. liquidity of their assets. which. The RBI is authorised to carry out periodical inspections of the banks and to call for returns and necessary information from them. The Bank now performs a varietyof developmental and promotional functions. it set up the Deposit Insurance Corporation in 1962. at one time. and establish and promote new specialised financing agencies. amalgamation. 1934. The RBI has set up the Agricultural Refinance and Development Corporation to provide long-term finance to farmers. the Reserve bank has certain nonmonetary functions of the nature of supervision of banks and promotion of sound banking in India. The Reserve Bank Act. 1949 have given the RBI wide powers of supervision and control over commercial and co-operative banks. As far back as 1935. Promotional functions With economic growth assuming a new urgency since Independence. Accordingly. the Agricultural Refinance Corporation of India in 1963 and the Industrial Reconstruction Corporation of India in 1972. extend banking facilities to rural and semi-urban areas. reconstruction. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilise savings. the range of the Reserve Bank's functions has steadily widened. the Reserve Bank of India set up the Agricultural Credit Department to provide agricultural credit. management and methods of working. The Bank has developed the co-operative credit movement to encourage saving. the Reserve Bank has helped in the setting up of the IFCI and the SFC. and to provide industrial finance as well as agricultural finance. and liquidation. and the Banking Regulation Act.
IDBI BANK (Industrial Development Bank Of India) .
the former continues to be the major shareholder (current shareholding: 65.INTRODUCTION The Industrial Development Bank of India (IDBI) was established on 1 July 1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. the ownership of IDBI was transferred to the Government of India and it was made the principal financial institution for coordinating the activities of institutions engaged in financing. would help overcome most of the limitations of the current business model of development finance while simultaneously enabling it to diversify its client/ asset base. for green-field projects as also for expansion. promoting and developing industry in the country. 1956 and a deemed Banking Company under the Banking Regulation Act 1949 and helped in obtaining requisite regulatory and statutory clearances. incorporation and registration of Industrial Development Bank of India Ltd. The fully owned housing finance subsidiary has since been renamed ‘IDBI Home finance Limited’. including those from RBI. both in rupee and foreign currencies.. In view of the signal changes in the operating environment. corporatisation of IDBI (with majority Government holding. The Notification facilitated formation. In the wake of financial sector reforms unveiled by the government since 1992. The bank was pioneer in adapting to policy of first mover in tier 2 cities. modernisation and diversification purposes. IDBI would commence banking business in accordance with the provisions of the new Act in addition to the business being transacted under IDBI Act. current share: 58. Although Government shareholding in the Bank came down below 100% following IDBI’s public issue in July 1995.47%) and transformation into a commercial bank. the ‘Appointed Date’ notified by the Central Government. IDBI diversified its business domain further by acquiring the entire shareholding of Tata Finance Limited in Tata Home finance Ltd. IDBI also provides indirect financial assistance by way of refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment terms. In 16 February 1976. The migration to the new business model of commercial banking. following initiation of reforms since the early 1990s. savings bank deposits. the IDB (Transfer of Undertaking and Repeal) Act 2003 was passed by Parliament in December 2003. The provisions of the Act have come into force from 2 July 2004 in terms of a Government Notification to this effect. Towards this end. IDBI provides financial assistance. In September 2003.14%). The Act provides for repeal of IDBI Act. . IDBI Bank. was a new generation Bank. as a company under the Companies Act. 1964 from 1 October 2004. signaling IDBI’s foray into the retail finance sector. Government of India has decided to transform IDBI into a commercial bank without eschewing its secular development finance obligations. The Bank has one of the highest productivity per employee in Indian banking industry. with which the parent IDBI was merged. The Pvt Bank was the fastest growing banking company in India. with its gateway to low-cost current.
IDBI would continue to provide the extant products and services as part of its development finance role even after its conversion into a banking company. With the Industrial Development Bank (Transfer of Undertaking and Repeal) Act. The IDBI Bank now is in a growing fold. Hence IDBI Bank is also referred as 'The New Age Government owned Bank' It has bought 10% stake in upcoming commodity bourse Universal Commodity Exchange (UCX) for Rs 10 crore the bank's top official said. among others. to be formed incorporated under the Companies Act.52% stake in IDBI Bank. Subsequently. Government of India now owns 70. RECENT DEVELOPMENTS To meet emerging challenges and to keep up with reforms in financial sector.The name of IDBI Fortis Life Insurance is now changed to IDBI Federal Life Insurance Co Ltd. the merger process is expected to be completed during the current financial year ending 31 March 2005. the Reserve Bank of India (RBI) issued the requisite notification on 30 September 2004 incorporating IDBI as a 'scheduled bank' under the RBI Act. In particular. single-window appraisal for term loans and working capital finance. 2003 (53 of 2003). 2003. RM . The commercial banking arm. the Board of Directors of IDBI and IDBI Bank accorded in principle approval to the merger of IDBI Bank with the Industrial Development Bank of India Ltd. Consequently. the new entity would also provide an array of wholesale and retail banking products. IDBI attained the status of a limited company viz. The immediate fall out of the merger of IDBI and IDBI Bank was the exit of employees of IDBI bank. formally entered the portals of banking business as IDBIL from 1 October 2004. designed to suit the specific needs cash flow requirements of corporate and individuals. The company ended the year with over 300 Cr in premiums as on 31 March 2009. was merged into.On 29 July 2004. of which IDBI Bank owns 48 percent. IDBI Bank entered into a joint venture with Federal Bank and Fortis Insurance International to form IDBI Fortis Life Insurance. 1934. "Industrial Development Bank of India Limited" (IDBIL). IDBI would leverage the strong corporate relationships built up over the years to offer customised and total financial solutions for all corporate business needs. The deal was completed recently. IDBI BANK. The cultures in the two organizations have taken its toll. A mutually gainful proposition with positive implications for all stakeholders and clients. IDBI. IDBI has taken steps to reshape its role from a development finance institution to a commercial institution. In March 2008. In addition. subject to the approval of shareholders and other regulatory and statutory approvals. strategic advisory and “hand-holding” support at the implementation phase of projects. With its retail banking arm expanding further after the merger of United western Bank. 1956 pursuant to the IDB (Transfer of Undertaking and Repeal) Act.
" said Malla.44 11.42 8. of employees Business per employee (in lakh) Profit per employee (in lakh) Capital and Reserves & surplus 2006-07 2007-08 442 509 2008-09 2009-10 2010-11 AGGREGATE 2010-11 520 718 820 45640 7482 8253 10201 12220 13602 475082 1387. PERFORMANCE OF IDBI Items No.95 8300 Deposits 43354 Investment 25675 Advances 62471 Interest 6345 income Other income 1027 8822 72998 32803 82213 8041 9424 112401 50048 103444 11545 10165 167667 73345 138202 15261 14568 180486 68269 157098 18601 205857 3127122 942837 2311478 256490 1582 1476 2302 2084 28625 .41 1144. It was the winner in two categories in Dun & Bradstreet's Polaris Software Banking Awards 2011. It has now a network of 977 branches.44 8.42 2346.86 8. The 977th branch is located at Kagal near Kolhapur in Maharashtra.77 8.93 6.16 1809. confirmed that the bank had picked up 10% in what will become the country's sixth commodity futures exchange. "The idea behind acquiring equity is to push agriculture loans through this venture. 661 centres and 1547 ATMs as on April 18. chairman and MD of IDBI Bank.Malla. "The other advantage is IDBI will be the only bank among the promoters and therefore all transactions of the exchange will be routed through IDBI. of offices No.17 2030.33 2417. 2012.
73 13.21 16.12 0.06 1.73 1.67 13.67 11.47 0.06 4.57 0.68 Return on advances adjusted to CoF 6.41 0.59 4.90 4.30 0.92 .73 4.31 1.62 11.02 0.19 4.97 5.38 Return on Assets CRAR Net NPA ratio 3.10 6.42 Wages as % to total expenses 4.92 0.14 5.27 4.89 5.95 1.93 5.53 11.64 1.41 4.62 3.Interest expended Operating expenses 5687 7364 10306 13005 14272 164135 778 959 1338 1831 2255 53819 Cost of Fund (CoF) 2.03 13.
527 Crore (from 3. 2012. July 31. 2011) Net profit up 28 % to NII grew by 10% to 427 Crore (from 1.282 Crore) 338 Crore) Deposits increased by 9% to 1.271 Crore (from 335 Crore) 1. which are as under: Working results: (Rs. in Crore) Q1 2012-13 Total Income Interest income Non-Interest Income Total Expenses Interest expenses Operating expenses Operating Profit Provisions (net) Net Profit 6787 6270 517 5658 4999 659 1129 702 427 Q1 2011-12 6060 5629 431 5029 4476 553 1031 696 335 FY 2011-12 25489 23370 2119 21433 18825 2607 4056 2025 2032 .91.09% (from 2.Highlights of Q1 FY 13 financial results vis-à-vis Q1 FY 12 (June 30.5% to 3.378 Crore) 1.747 Crore (from Fee based income increased by 23% to 417 Crore (from Mumbai.31.76.08%) Business up 8. (IDBI) met in Mumbai today to consider the unaudited financial results for the quarter ended June 30.59.152 Crore) NIM at 2. 2012: : The Board of Directors of IDBI Bank Ltd.
76.June 30.31. bring uniformity in the approach and terms of lending and thereby facilitate early financial closure of the infrastructure projects. 2. .91. 2012. registering a growth of 8. 2012 as against 13. 2012 stood at 1.683 crore 417 Crore as CAR: The Bank's CAR stood at 14. Fee based income for the quarter ended June 30. Deposits increased to 1. 335 crore in the corresponding quarter.83% (Tier I – 8.71. registering a growth of 9%.11%) as of June 30.Evaluation of Performance Profitability: IDBI reported a net profit of 427 crore for the quarter ended June 30.8. 1. 2012. 2011.899 crore as against as at end. 2011 with a growth of 9%.24%) as of June 30. IDBI Bank along with the country’s 9 largest PSU lenders has formed a consortium for jointly financing infrastructure projects with project cost of 1000 crore and above. stood at 2.747 Crore at end-June 2012 from 30. 2011.152 crore in the corresponding quarter of the previous year. The Bank also received the “Best Website” Award at the ceremony. This amounts to an increase in net profit by 28% for the quarter compared to corresponding quarter of the previous year. Net Interest Income (NII) for the quarter ended June 30. Business: As of June 30.527 crore as against 3. 2012 as against Rs. Significant developments during FY 2012-13(April– Till date) IDBI Bank was adjudged winner under Development Finance-Led Poverty Reduction category for its “Rural Transformation Fellowship Program (RTFP)” in the ADFIAP (Association of Development Financing Institutions in Asia & the Pacific) Awards 2012 in Istanbul. recording a growth of 10%.378 crore as of June 30.49.271 crore as against 1.36% (Tier I . 2011. IDBI’s total business (deposits and advances) stood at 3.59.5%. 2012 increased to against 338 Crore for the quarter ended June 30.282 crore at end-June Aggregate assets as of June 30. Turkey. The consortium aims to speed up the sanction process. 2011.
Mumbai. . conducted by RBI from time to time. subject to due diligence. IDBI Bank entered into a Memorandum of Understanding (“MOU”) with the Government of Karnataka (GoK) at the Global Investors Meet (GIM) held at Bangalore. The Portal is available to general public from May 15. 2012. GoK will furnish to IDBI Bank. IDBI Bank launched India’s first web-based market making portal and dedicated the same exclusively to the Retail Investors of the country. IDBI Bank extended relief in the form of financial assistance to four drought affected villages allotted to the Bank under financial inclusion. Sangli and Solapur in Maharashtra. the list of MoUs entered with the investors and the Bank will deploy additional funds as required for the proposed investments. IDBI Bank Becomes the First Primary Dealer in the Country to Facilitate Transaction on the Recently Launched Web-based Negotiated Dealing System [NDS] Auction of Gilts. Under this MOU. in the districts of Satara. IDBI Bank unveiled a state-of-art Currency Chest (one of the largest in the country) at Bandra-Kurla Complex.
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