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    Reserve Bank of India

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    HarshSuryavanshi
    The Reserve Bank of India (RBI) is India's central banking institution that controls monetary policy and regulates financial systems. As a central bank, the RBI provides important services like managing foreign exchange reserves and controlling inflation. The RBI's key functions include regulating commercial banks and financial institutions, issuing currency, managing foreign exchange, acting as a banker's bank, and setting policy rates and reserve ratios to influence monetary conditions.

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    Reserve Bank of India

    Uploaded by

    HarshSuryavanshi
    47 views11 pages
    The Reserve Bank of India (RBI) is India's central banking institution that controls monetary policy and regulates financial systems. As a central bank, the RBI provides important services like managing foreign exchange reserves and controlling inflation. The RBI's key functions include regulating commercial banks and financial institutions, issuing currency, managing foreign exchange, acting as a banker's bank, and setting policy rates and reserve ratios to influence monetary conditions.

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    The Reserve Bank of India (RBI) is India's central banking institution that controls monetary policy and regulates financial systems. As a central bank, the RBI provides important services like managing foreign exchange reserves and controlling inflation. The RBI's key functions include regulating commercial banks and financial institutions, issuing currency, managing foreign exchange, acting as a banker's bank, and setting policy rates and reserve ratios to influence monetary conditions.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    47 views11 pages

    Reserve Bank of India

    Uploaded by

    HarshSuryavanshi
    The Reserve Bank of India (RBI) is India's central banking institution that controls monetary policy and regulates financial systems. As a central bank, the RBI provides important services like managing foreign exchange reserves and controlling inflation. The RBI's key functions include regulating commercial banks and financial institutions, issuing currency, managing foreign exchange, acting as a banker's bank, and setting policy rates and reserve ratios to influence monetary conditions.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    Reserve Bank of India

    BY EISSA HAMZEH
    Introduction

    The Reserve Bank of India (RBI) is India's centr


    al banking institution, which controls the monetary p
    olicy of the Indian rupee. It commenced its operation
    s on 1 April 1935 during the British Rule in accordan
    ce with the provisions of the Reserve Bank of India A
    ct,1934
    The RBI plays an important part in the Development
    Strategy of the Government of India. It is a member
    bank of the Asian Clearing Union.
    Cont

    A Central Bank is an independent apex monetary aut


    hority which regulates banks and provides important
    financial services like storing of foreign exchange res
    erves, control of inflation, monetary policy report.
    Main Functions

    Financial Supervision: The primary objective of


    BFS is to undertake consolidated supervision of the fi
    nancial sector comprising commercial banks, financi
    al institutions and non-banking finance companies.
    BFS through the Audit Sub-Committee also aims at up
    grading the quality of the statutory audit and interna
    l audit functions in banks and financial institutions.
    Cont..

    Regulator and supervisor of the financial syst


    em: The institution is also the regulator and supervi
    sor of the financial system and prescribes broad para
    meters of banking operations within which the count
    ry's banking and financial system functions. Its objec
    tives are to maintain public confidence in the system,
    protect depositors' interest and provide cost-effective
    banking services to the public.
    Cont..

    Managerial of exchange control: to facilitate exte


    rnal trade and payment and promote orderly develop
    ment and maintenance of foreign exchange market in
    India
    Issue of currency: The bank issues and exchanges c
    urrency notes and coins and destroys the same when t
    hey are not fit for circulation. The objectives are to iss
    ue bank notes and give public adequate supply of the s
    ame, to maintain the currency and credit system of the
    country to utilize it in its best advantage, and to maint
    ain the reserves.
    Cont..

    Banker's bank: RBI also works as a central bank where comm


    ercial banks are account holders and can deposit money. RBI m
    aintains banking accounts of all scheduled banks. Commercial b
    anks create credit. It is the duty of the RBI to control the credit t
    hrough the CRR, bank rate and open market operations. As ban
    ker's bank, the RBI facilitates the clearing of cheques between t
    he commercial banks and helps the inter-bank transfer of funds
    . It can grant financial accommodation to schedule banks. It act
    s as the lender of the last resort by providing emergency advanc
    es to the banks. It supervises the functioning of the commercial
    banks and takes action against it if the need arises. The RBI also
    advices the banks on various matters for example Corporate Soc
    ial Responsibility
    Policy rates and reserve ratios

    Repo rate: for a short-term. When the repo rate incr


    eases, borrowing from RBI becomes more expensive.
    If RBI wants to make it more expensive for the banks
    to borrow money, it increases the repo rate similarly, i
    f it wants to make it cheaper for banks to borrow mon
    ey it reduces the repo rate. If the repo rate is increase
    d, banks can't carry out their business at a profit wher
    eas the very opposite happens when the repo rate is c
    ut down. Generally, repo rates are cut down whenever
    the country needs to progress in banking and econom
    y
    Cont..

    Reverse Repo Rate (RRR): Reverse Repo rate is t


    he 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 mon
    ey to RBI which is always safe instead of lending it ot
    hers (people, companies etc.) which is always risky.
    Cont

    Statutory liquidity ratio (SLR):part from the CR


    R, banks are required to maintain liquid assets in the
    form of gold, cash and approved securities. Higher li
    quidity ratio forces commercial banks to maintain a l
    arger proportion of their resources in liquid form an
    d thus reduces their capacity to grant loans and adva
    nces, thus it is an anti-inflationary impact. A higher l
    iquidity ratio diverts the bank funds from loans and
    advances to investment in government and approved
    securities.

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