Indias central bank

1935:

The Reserve Bank commenced operations as Indias central bank on April 1 as a private shareholders bank with a paid up capital of rupees five crore (rupees fifty million). 1949: The Government of India nationalised the Reserve Bank under the Reserve Bank (Transfer of Public Ownership) Act, 1948.

Managed by Central Board of Directors Indias 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

Official Directors 1 Governor 4 Deputy Governors, at a maximum Non-Official Directors 4 directorsnominated by the Central Government to represent each local board 10 directors nominated by the Central Government with expertise in various segments of the economy 1 representative of the Central Government 6 meetingsat a minimumeach year 1 meetingat a minimumeach quarter

27 Departments: These focus on policy issues in the Reserve Banks functional areas and internal operations. 27 Regional Offices and Branches: These are the Reserve Banks operational arms and customer interfaces, headed by Regional Directors. Smaller branches / suboffices are headed bya General Manager / Deputy General Manager. Training centres: The Reserve Bank Staff College at Chennai addresses the training needs of RBI officers; the College of Agricultural Banking at Pune trains staff of cooperative and commercial banks, including regional rural banks. The Zonal Training Centres, located at regional offices, train non-executive staff. Research institutes: RBI-funded institutions to advance training and research on banking issues, economic growth and banking technology, such as, National Institute of Bank Management (NIBM) at Pune, Indira Gandhi Institute of Development Research (IGIDR) at Mumbai, and Institute for Development and Research in Banking Technology (IDRBT) at Hyderabad. Subsidiaries: Fully-owned subsidiaries include National Housing Bank (NHB), Deposit Insurance and Credit Guarantee Corporation (DICGC), Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL). The Reserve Bank also has a majority stake in the National Bank for Agriculture and Rural Development (NABARD).

policy Regulation and supervision of the banking and non-banking financial institutions, including credit information companies Regulation of money, forex and government securities markets as also certain financial derivatives Debt and cash management for Central and State Governments Management of foreign exchange reserves Foreign exchange managementcurrent and capital account management
Monetary

 Banker to banks

Banker to the Central and State Governments Oversight of the payment and settlement systems Currency management Developmental role Research and statistics

policy refers to the use of instruments under the control of the central bank to regulate the availability, cost and use of money and credit. The goal: achieving specific economic objectives, such as low and stable inflation and promoting growth.
Monetary

Cash Reserve Ratio (CRR): The share of net demand and time liabilities that banks must maintain as cash balance with the Reserve Bank. Statutory Liquidity Ratio (SLR): The share of net demand and time liabilities that banks must maintain in safe and liquid assets, such as, government securities, cash and gold. Refinance facilities: Sector-specific refinance facilities (e.g., against lending to export sector) provided to banks. Bank Rate: Base Rate

Liquidity Adjustment Facility (LAF): Consists of daily

infusion or absorption of liquidity on a repurchase basis, through repo (liquidity injection) and reverse repo (liquidity absorption) auction operations, using government securities as collateral.

Open Market Operations (OMO): Outright sales/purchases

of government securities, in addition to LAF, as a tool to determine the level of liquidity over the medium term.

Market Stabilisation Scheme (MSS): This instrument for

monetary management was introduced in 2004. Liquidity of a more enduring nature arising from large capital flows is absorbed through sale of short-dated government securities and treasury bills. The mobilised cash is held in a separate government account with the Reserve Bank.

Sole note issuing authority Has authority to issues notes up to the value of Rs. Ten thousand Four printing press actively print notes:

DEWAR IN MADHYA PRADESH NASIK IN MHARASTRA MYSORE IN KARNATKA SALBONI IN WEST BENGAL

Makes sure that there is adequate supply of coins also Coins are minted in MUMBAI, NOIDA IN UP,KOLKATA N HYDERABAD Ensures security features to reduce the risk of counterfeiting or forgery

Manages governments domestic debts Facilitates transmission of monetary policy actions Develops the market for governments securities to raise debts at a reasonable cost

At the end of the each day all governments transactions are consolidated to get the net final position

Undertakes banking transaction for central and state government The RBIs Department of Government and Bank Accounts oversees governments banking related activities. The dept. encompasses:

1.Public Account Department 2.Public Debt Offices 3.Central Accounts Section at Nagpur

Determine the size, tenure and nature of the loan Define issuing process including holding of auctions Informs the public and potential investors about upcoming government loan auctions

RBI also market development efforts with the objective of broadening and deepening the Government securities market

Settlement of inter-bank obligations and transactions Enables banks to maintain their accounts with RBI for purpose of statutory reserve requirements and maintain transaction balances Lender of the last resort Loans and advances

 Ensures

safety and soundness of banking system Regulates and supervises nations financial system Regulates opening of branches of banks Issue of guidelines & directions for the commercial banks.

Foreign Exchange has evolved as a key segment of Indian financial market RBIs key roles in relation to Foreign Exchange: Regulating transactions related to the external sector and facilitating the development of the foreign exchange market Ensuring smooth conduct and orderly conditions in the domestic foreign exchange market Managing the foreign currency assets and gold reserves of the country Major currencies it deals with: US Dollar, Pound Sterling, EURO, Japanese Yen, Australian Dollar and Canadian Dollar.

This function consists of all the diverse arrangements that we use to systematically transfer money. The Payment and Settlement Systems Act of 2007 (PSS Act) gives the Reserve Bank oversight authority for the payment and settlement systems in the country.

Tools Of The RBI

Two Tired Structure:

1) 2)

It provides the basic framework for our payment systems. It focuses on the supervision of this framework.

 Deposit

Insurance and Credit Guarantee Corporation. Unit Trust of India (1964). Industrial Development Bank of India (1964). National Bank of Agriculture and Rural Development. Discount and Finance House of India (1988). National Housing Bank (1989). Securities and Trading Corporation of India (1994).