Reserve Bank of India-B.V.Raghunandan

Reserve Bank of IndiaReserve Bank of IndiaIntroduction, Formation, & Introduction, Formation, &

ManagementManagement

Traditional FunctionsTraditional Functions

Issue of Bank NotesIssue of Bank Notes Banker to the Banker to the

GovernmentGovernment Bankers' BankBankers' Bank Monetary Regulation Monetary Regulation Custodian Foreign Custodian Foreign

ExchangeExchange

Issue of NotesIssue of Notes

Minimum Reserve Minimum Reserve SystemSystem

Issue Department has 14 Issue Department has 14 officesoffices

In addition, Currency In addition, Currency Chest maintained by Chest maintained by SBI, its Associates, or SBI, its Associates, or PS BanksPS Banks

Banker to The GovernmentBanker to The Government Maintaining AccountsMaintaining Accounts Receiving the Revenue of the Receiving the Revenue of the

governmentsgovernments Making Payments of the Making Payments of the

governmentsgovernments Providing Remittance Providing Remittance

FacilitiesFacilities Issuing Treasury BillsIssuing Treasury Bills Providing Ways & Means Providing Ways & Means

FinanceFinance Advisor to the GovernmentAdvisor to the Government Representing the GovernmentRepresenting the Government

Bankers’ BankBankers’ Bank Ensuring Liquidity of BanksEnsuring Liquidity of Banks Clearing House & Clearing House &

Remittance FacilitiesRemittance Facilities Real Time Gross Real Time Gross

Settlement: Introduced in Settlement: Introduced in 2004, it is the beginning of a 2004, it is the beginning of a clearing system at the clearing system at the national levelnational level

Lender of Last ResortLender of Last Resort Negotiated Dealing System: Negotiated Dealing System:

Introduced in Aug 1, 2005 Introduced in Aug 1, 2005 for SGL A/c holders, it is an for SGL A/c holders, it is an anonymous order matching anonymous order matching system for government system for government securitiessecurities

Power Over the BanksPower Over the Banks Licensing to carry on bankingLicensing to carry on banking Licensing for branch expansionLicensing for branch expansion Approval of liquidity, capital Approval of liquidity, capital

adequacy and reservesadequacy and reserves Inspection of banksInspection of banks Appointment of chairmen with Appointment of chairmen with

the approvalthe approval Mergers & Acquisitions of Mergers & Acquisitions of

banksbanks Compulsory liquidation of Compulsory liquidation of

banks banks

Monetary RegulationMonetary Regulation

Quantitative Credit Quantitative Credit ControlControl

-Bank Rate-Bank Rate

-open market operation-open market operation

-variable cash reserve ratio-variable cash reserve ratio

Selective Credit ControlSelective Credit Control

-rationing of credit-rationing of credit

-margin requirement-margin requirement

-period allowed for -period allowed for repaymentrepayment

-moral suasion-moral suasion

Custodian of Foreign Exchange Custodian of Foreign Exchange ReserveReserve

Obligation to buy & sell Obligation to buy & sell currencies of members of currencies of members of IMFIMF

Receiving export revenue Receiving export revenue and other receipts from and other receipts from foreign countriesforeign countries

Routing all payments Routing all payments outsideoutside

Determining exchange Determining exchange ratesrates

Market interventionMarket intervention

Promotional Functions of RBIPromotional Functions of RBI

Publication of DataPublication of Data Deposit Insurance Deposit Insurance

CorporationCorporation Unit Trust of IndiaUnit Trust of India Bill Market Bill Market

Schemes,1952 & 1971Schemes,1952 & 1971 Banking Ombudsmen Banking Ombudsmen

Scheme, 1995-15 citiesScheme, 1995-15 cities

IDRBT in 1995IDRBT in 1995 Indian Financial Indian Financial

Network (INFINET) in Network (INFINET) in 19991999

National Financial National Financial Switch-ATM sharing by Switch-ATM sharing by banksbanks

Role of RBI in Agricultural FinanceRole of RBI in Agricultural Finance

Establishment of Establishment of Agricultural Credit Agricultural Credit Department in 1935Department in 1935

Development of Co-Development of Co-operative Movementoperative Movement

Funding LDBsFunding LDBs Setting up ARDC in 1963Setting up ARDC in 1963 Encouragement of RRBsEncouragement of RRBs Establishing NABARD in Establishing NABARD in

1982 1982

Role of RBI in Industrial DevelopmentRole of RBI in Industrial Development Establishment of Term Establishment of Term

Lending InstitutionsLending Institutions Credit Guarantee Schemes- Credit Guarantee Schemes-

Discontinued in 1981Discontinued in 1981 Credit Guarantee Credit Guarantee

Corporation of India Corporation of India Limited in 1971- Taken Limited in 1971- Taken over by Deposit Insurance over by Deposit Insurance Corporation in 1978Corporation in 1978

Small Loans Guarantee Small Loans Guarantee Scheme in 1981Scheme in 1981

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