RESERVE BANK OF INDIA

PALLAVI JOSHI
ROLL NO – 12
REG NO - 7020070050
Contents
 Meaning

Introduction to RBI

Nationalization of RBI

Role of central bank in under-developed economy

Functions of RBI

Financial Inclusion
MEANING

Central bank is a central point to the entire banking

system.
It is the apex financial institution of a country’s economy

through which the economic policy of the country in

general, and monetary policy in particular are
implemented.
RESERVE BANK OF INDIA

The RBI is the central bank of the country.

It was established on the recommendations of Hilton

Young Commission.
It has been established as a body corporate under the

Reserve Bank Of India Act, 1934 which came into effect

from 1st April, 1935.
RESERVE BANK OF INDIA (Contd)

The RBI was started as shareholders bank with a paid-up

capital of Rs. 5 crores was divided in 5 lakhs shares of Rs.

100 each.
On establishment it took over the function of management

of currency from the Government of India and power of

credit control from the Imperial Bank of India.
NATIONALIZATION

The Reserve Bank was nationalized in 1948 soon after the

independence. The basic reasons for nationalization were

as follows:
There was a trend towards nationalization of central Bank

of the country in all parts of the world after the end of the
second world war.
NATIONALIZATION (Contd)

The inflationary tendencies had started right from the

beginning of the second world war. In order to control

these tendencies effectively, it was thought proper to
nationalize the RBI, the central bank of country
responsible for credit and currency management.
Nationalization was necessary to use it as an effective

instrument for economic development of the country

 ROLE OF CENTRAL BANK IN
UNDER-DEVELOPED ECONOMY

Direct dealings with public

Development of integrated commercial banking system

Price stability

Providing manpower training

 ROLE OF CENTRAL BANK IN UNDER-
DEVELOPED ECONOMY (Contd)

Monetary expansion

Proper branch expansion

Ensure balanced Regional Growth

Maintenance low rate of interest

Removal of deficit in the Balance of Payment

FUNCTIONS OF RBI

FUNCTIONS OF RBI

TRADITIONAL FUNCTIONS DEVELOPMENTAL FUNCTIONS

 NOTE ISSUING
CENTRAL BANKING FUNCTIONS
●
CLEARING HOUSE FUNCTION
●
CHANGE OF CURRENCY
●
TRANSFER OF CURRENCY
●
PUBLICATION OF INFORMATION
●
CONTROL OVER NATIONALIZED BANKS
●
EXPORT ASSISTANCE
●
TRAINING IN BANKING

REGULATION OF CREDIT

BANKER OF GOVT

REGULATION OF EXCHANGE RATE

OTHER FUNCTIONS
GENERAL BANKING FUNCTIONS

TO DEAL
TO TO DEAL
LENDING IN
ACCEPT TO DEAL IN
OF FORIGN
DEPOSIT IN BILLS COSTLY
MONEY SECURITI
S METALS
ES
PROHIBITORY FUNCTIONS
NEITHER TO PARTICIPATE IN BUSINESS

NEITHER TO PURCHASE SHARES

NEITHER TO PURCHASE IMMOVABLE WEALTH

NOT TO DEAL IN TIME BILL

NOT TO GIVE INTEREST ON PRIVATE SAVINGS

NOT TO ADVANCE LOANS WITH SECURITIES

DEVELOPMENTAL FUNCTIONS
PROMOTION OF PROMOTION
AGRICUTURAL OF INDUSTRIAL
FINANCE FINANCE

PROMOTION
PROMOTION
OF EXPORT
FINANCE
OF BANKING
 FINANCIAL INCLUSION
DEFINITION

Delivery of financial
services at an affordable
cost to vast sections of
disadvantaged and low
income groups
FINANCIAL SERVICES INCLUDES

 Savings

 Credit

 Insurance

 Remittance facilities etc.

 MEASURES FOR PROMOTING
FINANCIAL INCLUSION
PRODUCTS

 No frill account

KYC norms simplified

Introduction of GCC

 KCC

 OTS for overdue loans up to Rs. 25000/-

 FUNDS FOR FINANCIAL INCLUSION

Micro Finance Development and Equity Fund

Financial Inclusion Fund for Development and

Promotional Interventions
Financial Inclusion Technology Fund to meet cost of

technology
MEASURES TAKEN BY RBI REGARDING
FINANCIAL INCLUSION
Regional Rural Banks (RRBs) have been

advised to offer “no frills” account facilities

RRBs have been permitted to set up ATMs

The Reserve Bank has advised scheduled

commercial banks and RRBs to introduce a

General Credit Card scheme (GCC)
RBI URGES BANKS TO PASS ON LOWER
RATES TO OLD CUSTOMERS
RBI Is Pushing Commercial Banks Hard To Pass On New Loan

Rates To Its Existing Customers

At Present Many Pvt And Public Sector Banks Have Been

Offering Home Loans At Rates As Low As 8% And For Old

Customers 10% - 12%
RBI Changes Prime Lending Rate System To Base Rate In Order

To Make Credit Market More Transparent

New Base Rate Is Fixed On The Basis Of Cost Of Funds
THANKYOU