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    Role of Rbi in Indian Banking System

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    Abhishek Golechha
    The Reserve Bank of India was established in 1935 and serves as the central bank of India. It formulates monetary policy, acts as a bank for the government and regulates commercial banks. Some key functions include issuing currency, maintaining price stability, promoting a sound banking system and managing foreign exchange reserves. It uses various policy tools like repo rate, CRR, SLR to influence money supply and control inflation. Currently, inflation remains high so the RBI has been gradually increasing policy rates.

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    Role of Rbi in Indian Banking System

    Uploaded by

    Abhishek Golechha
    191 views31 pages
    The Reserve Bank of India was established in 1935 and serves as the central bank of India. It formulates monetary policy, acts as a bank for the government and regulates commercial banks. Some key functions include issuing currency, maintaining price stability, promoting a sound banking system and managing foreign exchange reserves. It uses various policy tools like repo rate, CRR, SLR to influence money supply and control inflation. Currently, inflation remains high so the RBI has been gradually increasing policy rates.

    Original Description:

    This PPT deals with the latest trends, rates set by RBI etc.

    Original Title

    ROLE OF RBI IN INDIAN BANKING SYSTEM

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    © Attribution Non-Commercial (BY-NC)

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    The Reserve Bank of India was established in 1935 and serves as the central bank of India. It formulates monetary policy, acts as a bank for the government and regulates commercial banks. Some key functions include issuing currency, maintaining price stability, promoting a sound banking system and managing foreign exchange reserves. It uses various policy tools like repo rate, CRR, SLR to influence money supply and control inflation. Currently, inflation remains high so the RBI has been gradually increasing policy rates.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    191 views31 pages

    Role of Rbi in Indian Banking System

    Uploaded by

    Abhishek Golechha
    The Reserve Bank of India was established in 1935 and serves as the central bank of India. It formulates monetary policy, acts as a bank for the government and regulates commercial banks. Some key functions include issuing currency, maintaining price stability, promoting a sound banking system and managing foreign exchange reserves. It uses various policy tools like repo rate, CRR, SLR to influence money supply and control inflation. Currently, inflation remains high so the RBI has been gradually increasing policy rates.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    PRESENTED BY :abhishek golechha ghanshyam jani harshit jain pratik waghamare sagar Panchmatia sagar takke wro-0405227 wro-o399730 wro-0389484 wro-0372281 wro-0286706 wro-0387450

    CENTRE NAME :MIRA ROAD(EAST) BATCH MONTH :december-2011 BATCH TIME : 7.30 AM TO 11.30 AM
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    INTRODUCTION
    The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India.
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    Roles of RBI

    Note Issuing Authority Governments Banker Bankers Bank Supervising Authority Exchange control Authority

    Functions of RBI

    To maintain Monetary Stability To maintain Financial Stability To maintain stable payment system To promote the development of infrastructure of markets and systems Credit allocation To regulate the overall volume of money

    financial

    Contd..

    Centre of the Indian Financial and Monetary System Apex Institution Guiding, Monitoring and Controlling. Started functioning from 1st April 1935 , on the terms of Reserve Bank of India Act,1934 Was a Private Shareholders Institution till Jan 1949 after which it became a state-owned institution under the RBI Act.

    Note issuing authority

    Since its inception, RBI has the sole right or authority or monopoly of issuing currency notes other than one rupee notes and coins, and coins of smaller denominations. Although one rupee notes and coins, and coins of smaller denominations are issued by Government of India, they are put into circulation by RBI All affairs of the bank relating to note issue are conducted by its Issue Department
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    Contd

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    Banker to The Government


    Maintaining Accounts Receiving the Revenue of the governments Making Payments of the governments Providing Remittance Facilities Issuing Treasury Bills Providing Ways & Means Finance Advisor to the Government Representing the Government
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    Bankers Bank

    The bank controls the volume of reserves of commercial banks and thereby determines the deposits/credit creating ability of the banks. The banks hold a part of their reserves with the RBI In times of need, the banks borrow funds from RBI It is, therefore, called the bank of last resort or the lender of the last resort.
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    Contd
    Clearing House & Remittance Facilities Real Time Gross Settlement: Introduced in 2004, it is the beginning of a clearing system at the national level On the whole, the RBI is the ultimate source of money and credit in India

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    Supervising Authority

    Supervise and control commercial and co-operative banks. To issue the licenses for the establishments of new banks To issue licenses for setting up of bank branches To prescribe minimum requirements regarding paid-up capital and reserves, maintenance of cash and other liquid assets.

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    Contd

    To inspect the working of banks in India as well as abroad in respect of their Organizational set- up To conduct the investigations , from time to time , regarding irregularities, frauds, complaints, etc To control methods of operations of banks To control appointment, re-appointment, termination of appointment of the chairman and CEOs of Private sector banks

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    Exchange Control Authority


    It manages the exchange rate between the rupee and other currencies To negotiate with the monetary authorities and financial institutions like IMF, World Bank and Asian Development Bank. The RBI is the custodian of the countrys foreign exchange reserves, and it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner.
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    Techniques used by RBI

    OMO - Open market operations. Bank Rate - The rate at which RBI rediscounts the bills. Cash Reserve Ratio The CRR refers to the cash which banks have to maintain with the RBI as a percentage of their demand liabilities. Statutory Liquidity Ratio The SLR is the ratio of cash in hand exclusive of cash balances maintained by banks for CRR.
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    Expected outcomes

    Contain inflation and anchor inflationary expectations without disrupting growth. Reduce the volatility in overnight call money rates, thereby strengthening the monetary transmission mechanism. Continue the process of normalisation of the monetary policy instruments.

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    Recent policy rates

    Bank Rate: 6% Repo Rate: 8.5% Reverse Repo Rate: 7.5% CRR: 6% SLR: 24% Base Rate: 10.00%-10.75% Saving Bank Rate: 4% Deposit Rate: 8.5%-9.25%
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    Current scenario and reforms

    Policy Rates hiked, CRR left untouched: The Reserve Bank of India raised the Repo rate by 25 bps to 8.5% Reverse Repo rates by 50bps to 7.5%. An uneven rate hike just like last time to narrow the policy corridor. CRR was left untouched at 6.00%.

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    Trend in Key Policy Rates

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    GDP and Inflation Growth Forecast


    Macro Indicators GDP Inflation Money Supply (M3) Aggregate Deposit Non-Food Credit Growth Actual at present 7.7% (1Q FY11-12), 6.9% (2Q FY11-12) 9.7% (October) 9.1% (November) 16.3% 14.4% 17.5% Projection for FY11-12 8.5% 6.0% 18.0% 18.0% 18.0%

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    Liquidity in the system remains tight

    Banks borrowing avg Rs 17,000 cr daily this week

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    Money Supply growth anemic

    Money Supply is at 15.1% vs RBIs target of 17%

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    Key highlights

    The domestic recovery is consolidating and economy converging to its trend growth. Agriculture is clearly boosted by good monsoon.

    Inflation continues to remain a prime concern. Inflation has peaked but the headline number is significantly above the trend of 5.0-5.5%. Food inflation is still contributing to the pressure.
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    Contd

    Fiscal deficit is well within targets. Higher realization of 3G auction and buoyant tax revenues eliminate the risk of fiscal deficit overshooting target.

    The repo rate is likely to remain the effective policy rate as liquidity conditions are likely to remain at current levels.

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    FIRST CENTRAL BOARD OF DIRECTORS

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    SHARE CERTIFICATE OF RBI

    The Reserve Bank of India was set up as a Share Holders' Bank. The Share Issue of the Bank offered in March, 1935 was the largest share issue in India at that time. The matter was further compounded by the conditions and restrictions imposed under the Act. To simplify matters, Share Certificate Forms of the different registers were printed in different colors.

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    SHARE CERTIFICATE

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    References
    Websites
    http://www.google.com http://www.wikipedia.com http://www.rbi.org.in

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