Procedure Since its inception Reserve Bank has been playing key role

in the formulation of monetary, banking and financial policies. No Department has witnessed the various
phases of transition of Indian banking system from a closed one to well-liberalized one (particularly since
mid-1990s) from closer quarters than the Department of Banking Operations and Development -
popularly called DBOD.To facilitate the transition process and in order to effectively perform its varying
roles in the changing banking scenario, from ‘regulator’ to ‘facilitator’ over the period, Department has
undergone various organizational changes and so also in its activities, approach and functioning.

2. As varied segments within and without RBI interact with the Department on banking and related
issues/matters, we brought out a handbook of information on the Department aptly christened as " This
is…. DBOD" in February 2004 on the changing face of the Department for their information and benefit.
The handbook was placed on RBI’s website and widely covered in Bank’s Newsletter. Encouraging
response coupled with certain important organizational developments has necessitated the revision and
updation of first edition.

3. The handbook’s language and style of presentation is in keeping in view the interests of our cross-
section of readers and users, whether our other departments / Offices, colleagues, bankers,
academicians or others. We hope that they would find it a useful publication for the intended purpose and
enrich it with their valuable suggestions.

4. The contributions of our colleagues to the publication are immensely appreciated and gratefully
acknowledged.

Reserve Bank of India ( C.R.Muralidharan)

Department of Banking Operations Chief General Manager-in-Charge & Development
Central Office
Mumbai

September 30, 2004

INTRODUCTION

Reserve Bank of India has been empowered under Banking Regulation Act, 1949 to conduct the
inspection of banks and regulate them in the interest of banking system, banking policy and
depositors/public. While the Department of Banking Operations and Development exercises regulatory
powers in respect of commercial banks and Local Area Banks (LABs), Regional Rural Banks/District and
State Co-operative Banks and Urban Co-operative Banks are regulated by Rural Planning and Credit
Department and Urban Banks Department, respectively.

The Department of Banking Operations and Development is entrusted with the responsibility of regulation
of commercial banks and LABs under the regulatory provisions contained in the Banking Regulation Act,
1949 and the Reserve Bank of India Act, 1934 and other related statutes besides enunciation of banking
polices. It's functions broadly relate to prescription of regulations for compliance with various provisions of
Banking Regulation Act on establishment of banks such as licensing and branch expansion, maintenance
of statutory liquidity reserves, management and operations, amalgamation, reconstruction and liquidation
of banking companies. The other important activities of the Department include approval for setting up of
subsidiaries and undertaking of new activities by commercial banks. The Department endeavours
towards promoting and fostering a sound, multi-faceted and competitive banking system by laying down
norms for prudential regulation of commercial banks. It is also responsible for putting in place a pro-active
environment for development of new products and consequently, the Department has to keep itself
abreast of developments domestically and globally and formulate policy responses accordingly by
suggesting amendments to the existing laws/enactment of new legislation, regulation etc. Concomitant
with the above statutory obligation enjoined on it, the Department strives to bring the regulatory standards
of commercial banks on par with the international best practices. In order to achieve its objective of
establishing a world class banking system in India, it has to maintain professionally skilled staff in a
flexible organizational set-up with activities in tune with the time.

2. The handbook provides basic information about the Department through two sections, viz.

Section - I : Organizational set-up

Section - II : Major activities of various Sections/Cells

Section - I briefly throws light on the organizational set-up of the Department reflecting its various
functional groups with their allocations under respective Chief General Managers. The statistical and
other information furnished therein is as on September 1, 2004 and is subject to changes.

Section - IIdescribes the major activities of individual Sections/Cells of the Department in a brief manner.
Besides those activities, these Sections/Cells contribute material for Reserve Bank’s publications like
Annual Report, Report on Trend and Progress of Banking in India, Report on Currency and Finance,
publications of Government of India / International Organizations. They take follow-up action on points
emanating from meetings of Board for Financial Supervision (BFS), Central / Local Board of Directors and
reports of various Committees / Working Groups. They also attend to related Parliament questions, legal
matters, court cases, references from governments, trade bodies, public etc. The Department also brings
out every month a report on its important activities and submits half- yearly /yearly reports for Board for
Financial Supervision (BFS) and an annual report to the Central Board of Directors. It places its bank
circulars (including Master Circulars) and ‘Frequently Asked Questions’ publication on RBI website for the
benefit of bankers and others. The Master Circulars are periodically updated / revised. The Department is
also represented in various Committees, Working Groups, Forums etc. of RBI, banks, governments, etc.
The intranet site of the Department which was launched on April 20, 2004 contains comprehensive
information relating to its functions and working, bank circulars, monthly report on the important activities
of the Department, Bank’s publications, banking statutes, etc.

3. The Department functions in an environment supportive of consultative decision-making process.

Important policies are decided keeping in view the best international practices, views/comments from the
regulated entities, academia and other market participants.

ORGANISATIONAL SET-UP

The Department has pyramid - pattern organisational set-up. It is headed by Chief General Manager-in-
Charge, and has three other Chief General Managers. Besides, there are 22 Senior Officers viz. 8
General Managers and 14 Deputy General Managers. They look after their respective portfolios as shown
in the chart. The working strength of the Department as on September 1, 2004 is as under: Officers-110,
Class III employees – 107 and Class IV employees –77.

2. The Department comprises 19 Sections / Cells which attend to their respective areas of work, viz. Anti-
Money Laundering Cell, Appointments Section, Branch Licensing Section, Banking Policy Section,
Computer & Technology Cell, Directives Section, Defaulters List Cell, Financial Services Cell,
International Banking Section, Information Section, Industrial and Export Credit Section, JPC Cell,
Legislation Section, Private Sector Banks Section, Parliament Cell, Reconstruction Section, Returns
Section, Rajbhasha Anubhag and Administration & Establishment Division.

3. The major activities of the above Sections/Cells have been described in Section - II. Pursuant to the
recommendations of the High Level Review Group constituted by RBI in July 2002, the Department has
since taken over the responsibility of regulating Local Area Banks from Rural Planning and Credit
Department. Following the recommendations of the Committee on Job Consolidation / Re-alignment, the
Regional Offices (ROs) of the Department excepting Mumbai Regional Office (MRO) were merged with
Regional Offices of Department of Banking Supervision (DBS) with effect from May 10, 2004. MRO was
merged with DBOD, CO in the interest of operational expediency; consequently, its certain activities are
being attended to by Central Office. Further, the activities of erstwhile Industrial and Export Credit
Department relating industrial credit policy, export credit policy and industrial rehabilitation were merged
with DBOD, CO for better synergy with effect from July 1, 2