RBI

RESERVE BANK OF INDIA

INTRODUCTION
• Reserve Bank of India Central Bank of India
• Established 18 April 1935
• Governor Shaktikanta Das
• Headquarter Mumbai, Maharashtra
• Major Function - Supervision of commercial banks &
issuance of currency
• RBI become nationalized from January 1949.
FUNCTIONS OF RBI
• It controls and supervises the functioning of financial institutions,
commercial banks and non-banking financial companies by
establishing certain set rules & regulations to be followed
• It is authorized to facilitate the issuance and flow of currency in the
country by analyzing economic structure and prevailing scenario to
decide on the number of paper notes to be printed & circulated in
the system.
• While RBI prints the paper currency, coins are minted by the govt.
Of India and RBI acts as an agent for handling and distributing
coins
• RBI also keeps on upgrading the security features in currency to
avoid any kind of counterfeiting of currency
FUNCTION OF RBI
• It serves as a banker to the government by carrying out country’s
financial transactions efficiently by maintaining accounts of
payments and receipts
• It works as a banker’s bank in a way that commercial banks hold
their account in RBI, deposits money and borrows money as and
when required on the prevailing interest rate
• It regulated foreign exchange transactions by facilitating foreign
trade and maintaining foreign exchange market in India to create
forex reserve
• Until 2016 monetary policy was solely under control of RBI, but as
in 2016 Monetary policy committee has been formed to decide and
fix the interest rate in India.
QUANTITATIVE TOOLS
1. BANK RATE - minimum rate of interest charged by central bank from
commercial banks while giving loans against eligible security .
2. OPEN MARKET OPERATIONS – when RBI sells/buys the govt.
securities in open market .
3. C.R.R. {CASH RESERVE RATIO } – commercials banks are required
to keep certain amount of cash in RBI.
when RBI control credit CRR
when RBI expand credit CRR
4. S.L.R. {STATUTORY LIQUIDITY RATIO } – keeping required portion
with themselves .
when RBI decrease money supply SLR
when RBI increase money supply SLR
QUALITATIVE TOOLS
• RATIONING OF CREDIT – where RBI give
instruction to commercial banks by giving order for
which purpose loan should be given at specified rate .
• FIXING MARGIN – RBI fixes maximum amount of
margin against loan .
• RESTRICTION OVER CREDIT – RBI has power
to restrict unnecessary loans in the market .
THANK YOU