Role of RBI
BY- Rupendra Bansal
INTRODUCTION
• Established on 1st April 1935 in accordance with the
provisions of the RBI Act 1934 on the basis of
recommendations of the Hilton Young Commission.
• RBI Central office was in Kolkata, until it was
moved to Mumbai in 1937. RBI has 22 regional
offices.
• Originally privately owned, but after
nationalization in 1949, RBI is fully owned by GOI.
RBI : Governing Body
• RBI’s affairs are governed by a Central Board of Directors
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
Dr. D. Subbarao - 4 directors from local boards
Smt. Shyamala Gopinath Smt. Usha Thorat Dr. Subir Gokarn Dr. K. C. Chakrabarty
RBI at a Glance
• Managed by Central Board of Directors
• India’s monetary authority
• Supervisor of financial system
• Issuer of currency
• Manager of foreign exchange reserves
• Banker and debt manager to government
• Supervisor of payment system
• Banker to banks
• Developmental functions
• Research, data and knowledge sharing
Monitory Authority :
• RBI formulates, implements & supervises the
monitory policy of the country to maintain price
stability & ensure adequate flow of credit.
• RBI is the controller of credit i.e. it has the power to
influence the volume of credit created by banks in
India through various instruments.
The main objectives of monetary policy in India are:
Maintaining price stability
Ensuring adequate flow of credit to the productive
sectors of the economy to support economic growth
Financial stability
Issuer of currency :
• Under section 22 of the RBI Act, the bank has the
sole right to issue bank notes of all denominations.
• RBI has a separate Issue Dept. which is entrusted
with the issue of currency notes.
• Aims to give the public adequate supply of
currency notes & coins of good quality.
Denominations of coins and notes in circulation:
Coins in circulation: 25 paise, 50 paise, 1, 2, 5 and 10 Rupee
Notes in circulation: Rs. 5, 10, 20, 50,100, 500 and 1000 Bank
Regulator & Supervisor of the financial system :
• Provides broad parameters for banking operations
within which the country’s banking & financial system
functions.
• For supervising financial system, RBI formed the Board
of Financial Supervision (BFS) in 1994.
• BFS mainly supervises commercial banks, FIs & NBFCs.
• BFS’s main concerns are…
– Restructuring the system of bank inspections.
– Strengthening the role of statutory auditors.
– Legal issues in bank frauds, etc.
Managing Foreign Exchange
• Manages the foreign exchange of the country i.e.
maintains the exchange rate of Rupee against
other currencies.
• RBI also acts as the custodian of India’s reserve of
international currencies.
• Aim is to facilitate external trade & payments and
promote orderly development & maintenance of
foreign exchange market in India.
“In investing its foreign assets, the Reserve Bank is
guided by three principles: safety, liquidity and
return.”
Developmental Role
• Deposit Insurance and Credit Guarantee Corporation (1962), to provide
protection to bank depositors and guarantee cover to credit facilities
extended to certain categories of small borrowers
• Unit Trust of India (1964), the first mutual fund of the country
• Industrial Development Bank of India (1964), a development finance
institution for industry
• National Bank of Agriculture and Rural Development (1982), for
promoting rural and agricultural credit
• Discount and Finance House of India (1988), a money market
intermediary and a primary dealer in government securities
• National Housing Bank (1989), an apex financial institution for promoting
and regulating housing finance
• Securities and Trading Corporation of India (1994), a primary dealer
Financial services Financial inclusion Sector specific refinance:
To build the country’s financial infrastructure
“Improving transparency in our decisions and
actions is a constant endeavour at RBI.”
THANK YOU