ROLE OF RBI IN INDIAN BANKING SYSTEM

8/22/2019 ROLE OF RBI IN INDIAN BANKING SYSTEM

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PRESENTED BY :-abhishek golechha wro-0405227

ghanshyam jani wro-o399730harshit jain wro-0389484pratik waghamare wro-0372281sagar Panchmatia wro-0286706sagar takke wro-0387450

CENTRE NAME :MIRA ROAD(EAST)

BATCH MONTH :december-2011

BATCH TIME : 7.30 AM TO 11.30 AM

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INTRODUCTIONThe Reserve Bank of I ndia was established on

April1, 1935in accordance with the provisions

of the Reserve Bank of I ndia Act, 1934.

The Central Off ice of the Reserve Bank wasinitially established in Calcutta but was

permanently moved to Mumbai in1937.

The Central Off ice is where the Governor sits

and where policies are formulated.

Since nationalisation in1949, the Reserve Bank

is ful ly owned by the Government of I ndia.

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Note Issuing Authority

Governments Banker

BankersBank

Supervising Authority

Exchange control

Authority

Roles of RBI

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Functions of RBI To maintain Monetary Stability

To maintain Financial Stability

To maintain stable payment system

To promote the development of financial

infrastructure of markets and systems

Credit allocation

To regulate the overall volume of money

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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 underthe RBI Act.

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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 ofthe governments

Making Payments of thegovernments

Providing RemittanceFacilities

Issuing Treasury Bills

Providing Ways & MeansFinance

Advisor to the Government

Representing theGovernment

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Bankers Bank The bank controls the

volume of reserves ofcommercial 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 clearingsystem 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 otherliquid assets.

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Contd

To inspect the working of banks in India as well asabroad 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 ControlAuthority 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 AsianDevelopment 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 ofcash 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 transmissionmechanism.

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 andreforms

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 GrowthForecast

Macro Indicators Actual at present Projection for FY11-12

GDP 7.7% (1Q FY11-12),

6.9% (2Q FY11-12)

8.5%

Inflation 9.7% (October)9.1% (November)

6.0%

Money Supply (M3) 16.3% 18.0%

Aggregate Deposit 14.4% 18.0%

Non-Food Credit Growth 17.5% 18.0%

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Liquidity in the systemremains tight Banks borrowing avg Rs 17,000 cr daily this week

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Money Supply growthanemic 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.

I nf lation continues to remain a pr ime

concern. I nf lation has peaked but the

headline number is signi f icantly above the

trend of 5.0-5.5%. Food inf lation is sti l lcontr ibuting 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 l ikely to remain theeffective policy rate as liquidity conditions

are likely to remain at current levels.

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FIRST CENTRAL BOARD OFDIRECTORS

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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 thedifferent registers were printed in different colors.

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SHARE CERTIFICATE

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ReferencesWebsites

http://www.google.com

http://www.wikipedia.comhttp://www.rbi.org.in

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


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ROLE OF RBI IN INDIAN BANKING SYSTEM

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