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    About Reserve Bank of India (RBI)

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    Nitin sharma

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    About Reserve Bank of India (RBI)

    Uploaded by

    Nitin sharma
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    RBI

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    About Reserve Bank of India (RBI)

    Uploaded by

    Nitin sharma

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    © All Rights Reserved
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    About Reserve Bank of India (RBI)

     The Reserve Bank of India, abbreviated as the RBI, is the Central Bank of
    India, meaning it is the apex body in the Indian financial system.
     It is owned by the Union Ministry of Finance.
     It acts as a regulatory body, responsible for the regulation of the Indian
    banking system as well as the control, issuing, and maintaining money
    supply in the Indian economy.

    Objectives of Reserve Bank of India (RBI)


    Some of its major objectives can be seen as follows:

     To regulate the issue of banknotes


     To maintain reserves with a view to securqing monetary stability and
     To operate the credit and currency system of the country to its advantage.
     To maintain price stability while keeping in mind the objective of growth.

    Central Office of RBI

    The Central Office of the Reserve Bank of India is the main office and headquarters
    of the RBI. This is the office where the RBI Governor sits and the whole organization
    of the RBI is controlled from.

    Zonal Offices of RBI

    The RBI has 4 Zonal Offices, located in

     Kolkata – represents the East Region


     Mumbai – represents the West Region
     Delhi – represents the North Region
     Chennai – represents the South Region
    Functions of Reserve Bank of India (RBI)
    Major functions of the RBI can be seen under the following 2 heads:

    Monetary Functions of RBI

    Monetary Functions of the Reserve Bank of India include those functions which
    are concerned with money and money supply in the economy. Major functions
    coming in this category include:

     Issuer of Bank Notes: The Reserve Bank of India has the monopoly of
    issuing currency notes except for 1 Rupee note and coins.
    o The 1 Rupee note and the coins of all denominations are minted
    and issue by the Government of India, not the RBI. But, they
    are circulated by the RBI.
    o The RBI issues currency notes under a system called Minimum
    Reserve System.
     Banker to the Government: The RBI acts as a banking agent and financial
    advisor to the Central as well as the State Governments. In this capacity, the
    RBI:
    o Manages Government accounts and treasuries.
    o Keeps deposits of the Government.
    o Lends to the Governments without any interest for the short term
    o Buys and sells Government Securities (G-Secs) on the
    Government’s behalf.
    o Gives monetary and financial advice to the Governments.
     Bankers’ Bank: The RBI is the banker of all Scheduled commercial banks
    (SCBs). In this capacity, it performs the following functions:
    o Keeps the reserves of banks in the form of Cash Reserve Ratio
    (CRR) with itself.
    o Provides financial assistance to banks against mortgaged securities
    o Rediscounts Bills of Exchange.
     Lender of Last Resort: It also acts as a lender of last resort for the
    Scheduled Commercial Banks (SCBs). Usually, banks and other financial
    institutions borrow and lend among themselves to meet their financial needs.
    But, in times of crisis, the SCBs approach the RBI to get financial
    assistance.
     Custodian and Manager of Foreign Exchange Reserves: In order to
    stabilize the external value of Indian currency, the RBI maintains the
    reserves of foreign currencies to stabilize the exchange rate.
    o This function of the RBI also helps promote international trade.
     Controller of Credit or Money Supply: It uses its monetary policy tools to
    control the volume of money supply according to the economic situation of
    the nation.
    o This helps in controlling inflation and deflation and hence
    stabilizing the general price level in the economy.

    General Functions of RBI

    The General Functions of the RBI include functions related to general regulation and
    promotion of the banking system so as to maintain the health and growth of the
    banking system in the country. Major functions included in this category are as
    follows:

     Regulator of the Banks: The RBI Act of 1934 and the Banking Regulation
    Act of 1949 entrust the RBI with the powers to regulate the banks in the
    country. In this capacity, the RBI performs functions such as:
    o Licensing banks,
    o Prescribing minimum requirements of paid-up capital and
    reserves, etc.
     Promotional Functions: The RBI works towards the promotion of the
    Indian Financial System through functions such as
    o Enabling expansion of the Commercial Banks in terms of their
    branches in the country or aboard,
    o Promoting baking habits of people,
    o Promoting financial inclusion,
    o Consumer education and protection,
    o Promoting Digital India initiatives in financial sector, etc.

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