Agenda

 Preamble
 Brief history
 Governors
 The key role of the RBI
 Monetary authority
 Regulator and supervisor of the financial system
 Manager of foreign exchange
 Issuer of currency
 Developmental role
 Instruments of credit control
 Objective and reasons for establishment of RBI
 Subsidiaries
Central Bank
“It is a bank of banker”
-- Samuelson

“Bank which has monopoly over note issue”

-- Vera Smith

“Central bank is the government’s bank”

-- Sayers
Structure of Banking in India
Reserve Bank

Commercial Bank Co-operative Bank

-Public Sector Bank -State Co-op bank

-Private Sector bank -Central Co-op Bank

-Regional Rural Bank -Primary Co-op Soc

Commercial Bank
A bank that offers banking
services to individuals and
businesses is known as
commercial bank.
Accepting deposits from public
and granting loans to individuals
and businesses.
In India, the commercial banks
are required to be registered at
under Banking regulation act,
Commercial Banks
Massive funds are available at
the disposal of commercial
banks.
Commercial banks operate over a
larger area. Some commercial
banks even have branches in
foreign countries.
Commercial bank operate on the
commercial principles. They
operate to earn a profit.
Cooperative bank
A bank set up to provide finances to
agriculturists, rural industries and to
trade and industry of the urban area
(but upto a limited extent).
Accepting deposits from the members
and the public and granting loans to the
farmers and the small businessmen.
In India, cooperative banks are
required to be registered under the
cooperative societies act, of the
concerned state.
Cooperative bank
Limited funds are available at the
disposal of the cooperative bank.
The area of the operations are
usually confined to the state.
They do not operate to the
national level nor international
level.
Organizational Structure
Governor

Deputy Governor

Executive Directors

Principal Chief General Manager

Chief General Managers

General Managers

Deputy General Managers

Asstt. General Managers

Managers

Asstt Managers

Support staff
PREAMBLE

 The preamble of the Reserve Bank of India describe the basic functions
of the Reserve Bank as

“…to regulate the issue of Bank Notes and keeping of reserve with
a view to securing monetary stability in India and generally to operate
the currency and credit system of the country to its advantage ; to have
a modern monetary policy framework to meet the challenges of an
increasingly complex economy, to maintain price stability while
keeping in mind the objective of growth ”
BRIEF HISTORY (1 OF 2)

 It was set up on the recommendations of 1926 Royal Commission

on Indian Currency and Finance also known as the HILTON
YOUNG COMMISSION
 It was started as Share-Holders Bank with a paid up capital of 5 Crs
 It was established on 1st of April 1935
 Initially it was located in Kolkata
 It moved to Mumbai in the year 1937
 Initially it was privately owned
 It was the 1st bank to be Nationalized in 1949
 It has 22 regional offices, most of them in state capitals
BRIEF HISTORY (2 OF 2)

 Since nationalization in 1949, the Reserve Bank is fully owned by

the Government of India
 Its First governor was Sir Osborne A.Smith(1st April 1935 to 30th
June 1937)
 The First Indian Governor was “Sir Chintaman D.Deshmukh”(11 th
August 1943 to 30th June 1949)
 On 27th June 2006, the Union Government of India reconstituted
the Central Board of Directors of the Reserve Bank of India(RBI)
with 13 Members, including Azim Premji and Kumar Mangalam
Birla
GOVERNORS (1 of 2)

Sir Osborne A. Smith

April 1, 1935 to June 30, 1937

Sir James Braid Taylor 

July 1, 1937 to February 17,1943

Sir Chintaman D.Deshmukh 

August 11, 1943 to June 30, 1949
GOVERNORS (2 of 2)

Dr. Bimal Jalan

November 22, 1997 to September 5, 2003

Dr.Y.V.Reddy  
September 6, 2003 to September 5, 2008

Dr. D. Subbarao  
September 5, 2008 onwards
THE KEY ROLES OF THE RBI
ARE…
 Regulator and supervisor of the financial system

 Manager of Exchange control

 Issuer of currency

 Banker to the Government

 Bank to banks: maintains banking accounts of the scheduled banks

Monetary Authority
 Formulates, implements and monitors the monetary policy
 Objective: maintaining price stability and ensuring adequate flow of credit
to productive sectors

Regulator and supervisor of the financial system:

 Prescribes broad parameters of banking operations within which the
country's banking and financial system functions
 Objective: maintain public confidence in the system, protect depositors
interest and provide cost-effective banking services to the public

Manager of Foreign Exchange

 Manages the Foreign Exchange Management Act, 1999.
 Objective: to facilitate external trade and payment and promote orderly
development and maintenance of foreign exchange market in India
Issuer of Currency
 Issues and exchanges or destroys currency and coins not fit for
circulation
 Objective: to give the public adequate quantity of supplies of
currency notes and coins and in good quality

Developmental Role
 Performs a wide range of promotional functions to support national
objectives

Related Functions
 Banker to the Government: performs merchant banking function for
the central and the state governments; also acts as their banker
 Banker to banks: maintains banking accounts of all scheduled banks
 INSTRUMENTS OF CREDIT CONTROL

 Quantitative or General Methods

 Qualitative or Selective Methods

Quantitative Qualitative
 Bank Rate  Selective Credit Control
 Open Market  Rationing of Credit
 Operation(OMO)  Moral Persuasion
 Change in Cash  Direct Action
  Reserve Ratio (CRR)
 Statutory Liquidity Ratio(SLR)
 Repo and Reverse Repo Ratio
OBJECTIVE AND REASONS FOR

ESTABLISHMENT OF RBI
The main objectives for establishment of RBI as the central bank of
India were as follows :
 To manage the Monetary and credit system of the country
 To stabilize internal and external value of rupee
 For balanced and systematic development of banking in the country
 For the development of organized money market in the country
 For proper arrangement of agriculture finance
 For proper arrangement of industrial finance
 For proper management of public debt
 To establish monetary relations with other countries of the world and
international financial institutions
 For centralization of cash reserves of commercial banks
 To maintain balance between demand and supply of currency
SUBSIDIARIES..!
Fully owned
 National Housing bank (NHB)
 Deposit Insurance and Credit Guarantee Corporation of India (DICGC)
 Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)

Major stakes
 National Bank
 For Agriculture and Rural Development (N ABARD)
 The reserve Bank of India has recently divested stake in State Bank of
India to the government of India 
Related Functions
 RBI also regulates the opening / installation of ATM
 RBI regulates the opening of branches by banks
 It ensures that all the N.B.F.C follow the KYC Guidelines
 Fresh currency notes for ATM are supplied by RBI
 Banker to the Government: Performs all banking function for the
central and state governments and also act as their banker
 The reserve bank of India also regulates the trade of gold. Currently
17 banks are involved in the trade of gold in India RBI has invited
applications from more banks for direct import of gold to curb
illegal trade in gold and increase competition in the market
 It issues guidelines and directions for the commercial banks
Conclusion
 Central bank plays important role in achieving economic growth of
a developing country
 It promotes economic growth with stability
 It helps in attaining full employment balance of payment
disequilibrium and in stabilizing exchange rate
 RBI is an autonomous body promoted by the government of India
and is headquartered at Mumbai
 RBI is an autonomous body promoted by the government of India
and is headquartered at Mumbai treasury foreign exchange
movements and is also the primary regulator for banking and non-
banking financial institutions
 The RBI operates a number of government mints that produce
currency and coins
RBI Websites
 RBI Bulletin………………………………..www.bulletin.rbi.org.in
 RBI Annual Report……………………...….www.annualreport.rbi.org.in
 Weekly Statistical Supplement……………...www.wss.rbi.org.in
 Monetary and Credit Policy………………….www.cpolicy.rbi.org.in
 RBI Notifications…………………………….www.notifics.rbi.org.in
 RBI Press Release…………………………….www.pr.rbi.org.in
 RBI Speeches…………………………………www.speeches.rbi.org.in
 Monetary and credit Information Review……www.mcir.rbi.org.in
 Report on Trend and Progress of Banking…..www.bankreport.rbi.org.in
Sources

www.rbi.org.in

www.financialexpress.com