Name:

-AnantShahar
am Bat
ti
se
Sub:
-fi
nanci
almar
ket
sCI
A-1
PRN-
PMB20M1008

I
ndi
anFi
nanci
alSy
stem
TheReser
veBankofI
ndi
aist
hesol
eaut
hor
it
yfort
hei
ssueofcur
rencyi
nIndi
aot
her
t
hanoner
upeenot
esandsmal
lcoi
nswhi
char
eissuedbyGov
ernmentofI
ndi
a.The
i
ssueofnot
esbyt
heRBIi
skeptsepar
atef
rom t
her
estofi
tsbanki
ngoper
ati
ons.

Fort
hist
heRBIi
sor
gani
zedundert
wosepar
atedepar
tment
,theI
ssueDepar
tment
andBanki
ngDepar
tmentt
hef
ormerbei
ngsol
elyr
esponsi
blef
ort
hei
ssueofnot
es
f
ori
nter
nal
pur
poses.Ther
ear
ecoi
nsandcur
rencynot
esf
orext
ernal
pur
poses.

Ther
upeei
sconv
ert
ibl
etot
hecur
renci
esofot
hercount
ri
es.TheRBIkeepsa
mi
nimum backi
ngofRs.200cr
oreagai
nsti
ssuanceofcoi
nsandcur
rencynot
esout
ofwhi
cht
her
eshoul
dbegol
dwor
thRs.115cr
oreandbal
ancei
nrupeesecur
it
ies.

Thei
ssueofcur
rencyi
ntoci
rcul
ati
onandi
tswi
thdr
awal
from ci
rcul
ati
oni
.e.
expansi
onandcont
ract
ionr
espect
ivel
ytakespl
acet
hrought
heBanki
ngDepar
tment
oft
heRBI
.Thoughoner
upeenot
esandcoi
nsandsmal
lcoi
nsar
eissuedbyt
he
Cent
ral
Gov
ernment
,thi
sdi
str
ibut
iont
othepubl
i
cist
hesol
eresponsi
bil
i
tyoft
heRBI
.

Accor
dingt
othepr
ovi
sionoft
hel
awt
heRBIcanpr
intandi
ssuecur
rencynot
esof
di
ff
erentdenomi
nat
ionsf
rom t
wor
upeenot
etot
ent
housandr
upeenot
es.

I
ndi
a’
sfi
nanci
alsy
stem i
ncl
udesahostofi
nst
it
uti
onsandt
hemechani
smswhi
ch
af
fect
sthegener
ati
onofsav
ingsbyt
hecommuni
ty.TheI
ndi
anf
inanci
alsy
stem
per
for
msacr
uci
alr
olei
neconomi
cdev
elopmentofI
ndi
athr
oughsav
ingi
nvest
ment
pr
ocess,
alsoknownascapi
tal
for
mat
ion.

TheI
ndi
anf
inanci
alsy
stem whi
chr
efer
stot
hebor
rowi
ngandl
endi
ngoff
unds
consi
stsoft
wopar
tsv
iz:
Indi
anmoneymar
ket(
organi
zedandunor
gani
zedsect
or)
andt
heI
ndi
ancapi
tal
mar
ket
.

Theor
gani
zedbanki
ngi
nIndi
acanbedi
vi
dedi
ntot
hreecat
egor
iesv
izt
heCent
ral
Bankoft
heCount
ryast
heReser
veBankofI
ndi
a,t
heCommer
cial
Banksand
Cooper
ati
veBanks.
TheRBIi
sthesupr
ememonet
aryandbanki
ngaut
hor
it
yint
hecount
ryandhast
he
r
esponsi
bil
i
tyt
ocont
rol
thebanki
ngsy
stem.I
tkeepst
her
eser
veofal
lCommer
cial
Banksandhencei
sknownast
heReser
veBank.

Commer
cial
Banksmobi
l
izessav
ingsi
nur
banar
easandmaket
hem av
ail
abl
eto
l
argeandsmal
li
ndust
ri
alandt
radi
nguni
tsmai
nlyf
orwor
kingcapi
tal
requi
rement
s.

Af
ter1969commer
cial
banksar
ebr
oadl
ycl
assi
fi
edi
ntonat
ional
i
sedorpubl
i
csect
or
banksandpr
ivat
esect
orbanks.TheSt
ateBankofI
ndi
a(SBI
)andi
tsassoci
ate
banksar
ethepubl
i
csect
orbanks.

TheRegi
onal
Rur
alBankscamei
ntoex
ist
encesi
nce1976wi
tht
hespeci
fi
cobj
ect
ive
ofpr
ovi
dingcr
edi
tanddeposi
tfaci
l
iti
espar
ti
cul
arl
ytosmal
landmar
ginal
far
mer
s,
agr
icul
tur
all
abour
er’
sar
ti
sansandsmal
lent
repr
eneur
s.

Pr
imar
yco-
oper
ati
vecr
edi
tsoci
eti
esorbankswer
eor
igi
nal
l
ysetupi
nvi
l
lagest
o
pr
omot
ethr
if
tandsav
ingsoft
hef
armer
sandt
omeett
hei
rcr
edi
tneedsf
or
cul
ti
vat
ion.

Tosuppor
tthem,
cent
ral
ordi
str
ictcooper
ati
vebankswer
eest
abl
i
shed.Thef
unds
oft
heRBImeantf
oragr
icul
tur
alsect
oract
ual
l
ypasst
hrought
hest
ateco-
oper
ati
ve
bankandcent
ral
co-
oper
ati
vebanks.

Af
teri
ndependencet
heI
ndi
anbanki
ngsy
stem hasr
ecor
dedr
api
dgr
owt
h.Thi
swas
duet
oeconomi
cpl
anni
ng,
incr
easei
nmoneysuppl
y,gr
owt
hofbanki
ngsect
or,
cont
rol
andgui
dancebyt
heRBIandnat
ional
i
sat
ionofbanksi
nJul
y1969.

I
n1950-
51,
ther
ewer
e430commer
cial
banksbutt
hememberbanksdecl
i
ned
r
api
dlyduet
oRBI
spol
i
cyormer
gerofsmal
lbankswi
thbi
gbanksasameasur
eof
st
rengt
heni
ngt
hebanki
ngsy
stem.14maj
orI
ndi
anschedul
edcommer
cial
banks
eachhav
ingaggr
egat
edeposi
tsofnotl
esst
hanRs.50cr
orewer
etakenov
erbyt
he
Gov
ernmentofI
ndi
ain1969.

OnApr
il15,
1980si
xmor
ecommer
cial
bankswhoset
otal
deposi
tsexceededbyRs.
200cr
orewer
enat
ional
i
sed.Thust
heSt
ateBankofI
ndi
a,7associ
atebanksofSBI
,
19nat
ional
i
sedbanksi
.e.27commer
cial
bankst
oget
herconst
it
utepubl
i
csect
or
commer
cial
banks.