By.Prof.

Renuka Morani
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 -Central Co-op
bank Bank
-Regional Rural Bank -Primary Co-op
Soc
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”
BRIEF HISTORY
 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 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
 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”(11th
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 ()

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
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
THANK
YOU