Reserve Bank of India

The Reserve Bank of India (RBI) is India's central bank, which

controls the issue and supply of the Indian rupee. RBI is the regulator of
the entire Banking in India. RBI plays an important part in the
Development Strategy of the Government of India.
RBI regulates commercial banks and non-banking finance companies
working in India. It serves as the leader of the banking system and the
money market. It regulates money supply and credit in the country. The
RBI carries out India's monetary policy and exercises supervision and
control over banks and non-banking finance companies in India. RBI
was set up in 1935 under the Reserve Bank of India Act,1934.
 Functions
Financial supervision
Regulator and supervisor of the financial system
Regulator and supervisor of the payment and settlement systems
Banker and debt manager to government
Managing foreign exchange
Issue of currency
Banker's bank
Regulator of the Banking System
Detection of fake currency
Developmental role
Agricultural Finance
Collection and Publication of Debt
 Issues Currency
1. Notes
1.Dewas
2. Salboni
3. Nasik
4. Mysore
2. Coins (Mint)
Mumbai, , Kolkata, Hyd, Noida
1. Coin Blanks – MKH
2. Commemoratives-MK
3. Medallions- KH
4. Alloys (FSS, Brass is an alloy of zinc and Nickel)
5. Stainless Steel Coins- Noida
 (Credit Control) Policy rates and reserve
ratios
Repo rate
Reverse repo rate (RRR)
Statutory liquidity ratio (SLR)
Bank rate
Cash reserve ratio (CRR)
 Repo rate
(4.00%Rates as of 22 May 2020)
Repo (repurchase) rate also known as the benchmark interest rate is
the rate at which the RBI lends money to the commercial banks for a
short-term (a maximum of 90 days). When the repo rate increases,
borrowing from RBI becomes more expensive.
 Reverse repo rate (RRR)
(3.35% Rates as of 22 May 2020)
As the name suggest, reverse repo rate is just the opposite of repo
rate. Reverse repo rate is the short term borrowing rate at which RBI
borrows money from banks. The reserve bank uses this tool when it
feels there is too much money floating in the banking system. An
increase in the reverse repo rate means that the banks will get a higher
rate of interest from RBI. As a result, banks prefer to lend their money
to RBI which is always safe instead of lending it to others (people,
companies, etc.) which is always risky.
 Statutory liquidity ratio (SLR)
(18.00%Rates as of 22 May 2020)
Apart from the CRR, banks are required to maintain liquid assets in
the form of gold, cash and approved securities. Higher liquidity ratio
forces commercial banks to maintain a larger proportion of their
resources in liquid form and thus reduces their capacity to grant loans
and advances, thus it is an anti-inflationary impact. A higher liquidity
ratio diverts the bank funds from loans and advances to investment in
government and approved securities.
 Bank rate
(4.25 Rates as of 22 May 2020)
Bank rate is defined in Section 49 of the RBI Act of 1934 as the
'standard rate at which RBI is prepared to buy or rediscount bills of
exchange or other commercial papers eligible for purchase'. When
banks want to borrow long term funds from the RBI, it is the interest
rate which the RBI charges to them. It is currently set to 4.25.
 Cash reserve ratio (CRR)
CRR refers to the ratio of bank's cash reserve balances with RBI with
reference to the bank's net demand and time liabilities to ensure the
liquidity and solvency of the scheduled banks. The share of net demand
and time liabilities that banks must maintain as cash with the RBI. The
RBI has set CRR at 3%. A 1% change in CRR affects the economy by
1,37,000 crore. An increase draw this amount from the economy, while
a decrease injects this amount into the economy. So if a bank has ₹2
billion (US$28 million) of NDTL then it has to keep ₹80 million (US$1.1
million) in cash with RBI. RBI pays no interest on CRR.