ROLE OF RBI

By mamta (012) Shruti singh (014)

Introduction

It is the Central Bank of India Established in 1st April 1935 under the RESERVE BANK OF INDIA ACT. Its head quarter is in Mumbai (Maharashtra). Its present governor is MR. Raghuram Rajan.

It has 22 Regional Offices, most of them in State capitals

Brief history of RBI

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 crores. Initially it was located in Kolkata. It moved to Mumbai in 1937. Initially it was Privately Owned. Since Nationalization in 1949, the Reserve Bank is fully owned by the Government of India.

Structure of RBI

20 central board of directors 1 governor 4 deputy governor 15 directors Local boards Offices of RBI

PREAMBLE
The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as :To regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage."

Role of RBI

Note Issuing Authority Government Banker Bankers Bank Supervising Authority Exchange Control Authority Promoter Of The Financial System Regulator Of Money And Credit

Note Issuing Authority

The Reserve Bank is the nations sole note issuing authority Bank issues notes in the following denominations: 2,5,10,20,50,100,and 500 Exchange notes and coins of one denomination into other as demanded by the public The bank can issue the notes against the security of gold coins, foreign securities rupee coins, etc

Government Banker

RBI is the banker of the central and state governments It advances short-term loans to the government and raises loans from the public. It manages public debt. It purchases and sells through bills and currencies on behalf to the government. It receives and makes payment on behalf of the government. To bridge the temporary gap between receipts and payments maximum maturity period of these advance is 3 months

Bankers bank

Special relationship with commercial and co-operative banks Bank control the volume of reserves of commercial banks Determines the deposits/credit creating ability of the bank Bank hold a part or all of their reserves with the RBI RBI is the ultimate source of money and credit in India

Supervising Authority
RBI has vast power to supervise and control commercial and co-operative banks Powers : Issue licenses for the establishment of new banks issue licenses for the setting of bank branch Maintain cash reserve ratio Inspect working of banks Control the methods of operations of banks

Exchange control authority

Maintain the stability of the external value of the rupee Task of RBI To Administer the foreign exchange control To choose the exchange rate system To manage the exchange reserve To interact or negotiate with the monetary authorities

Promoter of the financial system

Money market Agriculture sector Industrial sector Credit delivery

Regulator of money and credit

RBI takes into account the following monetary policies to control money supply and credit a) Open Market Operations b) Cash Reserve Ratio c) Statutory Liquidity Ratio d) Bank Rate Policy e) Repo Rate and Reverse Repo Rate

RBI Related News

RBI constituted Expert Committee to revise and strengthen Monetary Policy Framework Cabinet approved the proposal to invest 4.3 Billion $ in the World Bank Bonds RBI issued norms for currency swap window RBI allowed the Non-Resident Investors to buy Shares under FDI Scheme Raghuram Rajan succeeded Subbarao as the 23rd Governor of RBI