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R.B.IRESERVE BANK OF INDIA

Presented by:Ujjal Bhandari

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Establishment

Established on 1st April 1935 in accordance with theprovisions of the RBI Act 1934 on the basis ofrecommendations of the Hilton Young Commission.

RBI Central office was in Kolkata, until it wasmoved to Mumbai in 1937. RBI has 22 regionaloffices.

Originally privately owned, but after nationalization in1949, RBI is fully owned by GOI.

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RBI : Governing BodyRBIs affairs are governed by a Central Board ofDirectors appointed by the GOI.

Central Board of Directors

Official Directors Non-Official Directors- Full time directors - 10 directors from- Governor various fields

- 4 Deputy governors - 1 govt. official- 4 directors from local

boards

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FunctionsRegulator & Supervisor of the financial system :

Provides broad parameters for banking operationswithin which the countrys banking & financial systemfunctions.

For supervising financial system, RBI formed the BoardofFinancial Supervision (BFS) in 1994.BFS mainly supervises commercial banks,FIs & NBFCs.BFSs main concerns are

Restructuring the system of bank inspections. Strengthening the role of statutory auditors. Legal issues in bank frauds, etc.

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FunctionsManagingForeignExchange :

Manages the foreign exchange of the country i.e.maintains the exchange rate of Rupee against othercurrencies.RBI also acts as the custodian of Indias reserve ofinternational currencies.Aim is to facilitate external trade & payments andpromote orderly development & maintenance of foreignexchange market in India.

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FunctionsIssuer of currency :

Under section 22 of the RBI Act, the bank has the soleright to issue bank notes of all denominations.Issues & exchanges or destroys currency & coins notfit for circulation.RBI has a separate Issue Dept. which is entrusted withthe issue of currency notes.Aims to give the public adequate supply of currencynotes & coins of good quality.

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FunctionsBanker to government :

Acts as a government banker, agent & adviser for thecentral bank as well as for all state govts. (exceptJammu & Kashmir)RBI has to keep cash balances of the govt. as deposits,receive and make payments on behalf of the govt.It also provides loans and advances to state govts andlocal authorities.

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FunctionsBankers bank & lender of last resorts :

All scheduled banks have to maintain cash reserves i.eCRR equal to 3% of their aggregate deposit liabilities.The schedule banks can borrow money from RBI on thbasis of the eligible securities in times of need &urgency.

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FunctionsPromotional functions :

RBI has directly or indirectly set up financialinstitutions like Deposit Insurance Corporation, UTI,IDBI, Agricultural Refinance Corporation of India, Co-operative credit movements, etc.This was with a view of promoting saving habits,eliminating money lenders, mobilizing savings,

providing industrial & agricultural loans.

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ConclusionAll the functions of RBI, monitory, non monitory,supervisory or promotional are equally significant incontext of the Indian economy.Under the Banking Regulation Act, RBI has been givenwide range of powers.Under the supervision & inspection of RBI, the workinof banks has greatly improved.

RBI has been responsible for strong financial supportto industrial & agricultural development in the country.

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